Bank of Japan: Assessing the outcome of its strategic review
- The Bank of Japan kept the status quo at its March monetary policy meeting but the market’s attention was on its policy review
- The Bank judged that the current quantitative and qualitative easing with yield curve control, as well as its inflation overshooting commitment, function well, and that there is no need to revise its basic policy framework
- Beyond its “basic” policy framework, it reinforced its policy to alleviate the impact of persistently low interest rates on financial institutions. It will allow more fluctuation of 10-year bond yields around its target, with an asymmetric cap to upside pressure, as to not jeopardise the recovery. And it will adopt a more flexible approach to exchange traded fund purchases
- Those marginal changes were necessary but we still believe the longer the current accommodative stance lasts, the more its side effects must be addressed
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