Here are the key points from the Bank of Japan's monetary policy meeting

1. Yield curve control

 

 

  • Short-term policy interest rate: negative 0.1 percent.

  • Long-term interest rate: 10-year JGB yields around zero percent.

  • The Bank will purchase JGBs without setting an upper limit

  • The Bank will continue with large-scale JGB purchases and conduct fixed-rate purchase operations to encourage a yield curve that is consistent with its guideline

2. Guidelines for asset purchases

  • The Bank will purchase ETFs and J-REITs as necessary, with upper limits of about 12 trillion yen and about 180 billion yen, respectively

  • The Bank will maintain the amount outstanding of CP at about 2 trillion yen.

  • The Bank will purchase corporate bonds at about the same pace as prior to the COVID-19 pandemic.

3. Economic outlook

  • Japan's economy is likely to recover with the impact of COVID-19 and supply-side constraints waning.

  • The rate of increase in the CPI is likely to decelerate toward the middle of fiscal 2023 due to the effects of pushing down energy prices from the government's economic measures.

  • Thereafter, the rate of increase is projected to accelerate again moderately.

4. Risks to the outlook

  • There remain extremely high uncertainties for Japan's economy, including developments in overseas economic activity and prices, developments in the situation surrounding Ukraine and in commodity prices, and the course of COVID-19 at home and abroad.

5. Quantitative and Qualitative Monetary Easing (QQE)

  • The Bank will continue with Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and expand the monetary base until the year-on-year rate of increase in the observed CPI exceeds 2 percent and stays above the target in a stable manner. The Bank will support financing, mainly of firms, and maintain stability in financial markets, and will not hesitate to take additional easing measures if necessary.

What it means?

The Bank of Japan's monetary policy decisions can have an impact on the value of the yen, as they influence the supply of and demand for the currency. In general, when the Bank of Japan implements monetary easing measures such as lowering interest rates or buying assets, it can increase the supply of yen in the market and lower its value relative to other currencies. Conversely, when the Bank of Japan tightens monetary policy by raising interest rates or reducing asset purchases, it can decrease the supply of yen in the market and increase its value relative to other currencies. However, the impact of these policies on the yen can be complex and depends on a variety of factors, including global economic conditions and market sentiment.

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