EWJV - Bank of Japan Pivot Proves Underwhelming For Markets
2024-03-19 14:30:00 ET
Summary
- The Bank of Japan has now ended decades of unconventional and aggressive monetary easing.
- Strong wage negotiation results played a crucial role in today's move.
- The market's immediate reaction was rather disappointing as the BoJ pledged to maintain accommodative monetary conditions.
By Min Joo Kang & Chris Turner
Summary of the BoJ's new monetary policy framework
- The BoJ will restore the uncollateralised overnight call rate as a primary policy tool and set the rate in a range between 0% to 0.1% (a 7-2 majority vote).
- A continuation of its JGB purchases with broadly the same as before - currently about six trillion yen per month (an 8-1 majority vote).
- The central bank will discontinue the purchase of ETFs/J-REITs while gradually reducing the amount of purchase of CP and corporate bonds. It will discontinue the purchases in about one year (a unanimous vote).
- The BoJ has also opted to change its terms and rates for lending facilities (a unanimous vote).