Via the FT comes the BOJ wrap:
- Interest rates were kept on hold at minus 0.1 per cent, although further rate cuts were not ruled out.
- The scale of its quantitative easing programme was also kept on hold, with overall asset purchases “more or less in line with the current pace” the BoJ said – this is currently ¥80tn a year.
- However the BoJ has scrapped the maturity target in its bond-buying programme, a move which will ease the pressure on banks as a consequence of negative interest rates. Currently, the average remaining maturity of the government bonds the BoJ buys is set at 7-12 years. “[The] guideline for average remaining maturity of the Bank’s JGB purchases will be abolished”, the BoJ said.
- The timeframe for reaching 2 per cent inflation target, which has been repeatedly pushed back since being first announced in April 2013, has now been set as “the earliest possible time”, – likely to be longer than the target of during fiscal 2017, the most recent date range outlined. The BoJ said it was “[committed to] expanding the monetary base until it exceeded this target.” The BoJ admitted defeat in stating starkly that this target has not been achieved.
- The BoJ’s annual purchases of equity funds to ¥6tn (a level doubled in July) were kept on hold.
Looks like a move to protect bank’s net interest margins while they plunge the short end of the curve deeper negative in coming meetings. Quantitative failure be damned! The yen fell sharply and is still falling:
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