Bank Of Japan Leaves Policy Unchanged As Expected - Admits "Inflation Weakening"

As expected, The Bank of Japan left all of its various machinations of monetary policy unchanged with Kataoka the lone dissenter (preferring a more aggressive stance of yield curve control). The key line in the statement appears to be "inflation expectations have remained in a weakening phase," which is the enabling narrative of lower and moarer for longer.

  • BOJ Maintains Policy Balance Rate at -0.100%
  • BOJ Maintains 10-Year JGB Yield Target at About 0.000%
  • No change in the 80 trillion yen target for bond buying, a figure that the BOJ hasn't been meeting for some time and that's assumed to be removed whenever the central bank does decide to fine-tune its policy.

Overall the language in the statement is very similar with no real change in tone.

The decision on QQE with Yield Curve Control made in 8-1 vote, with Kataoka dissenting again. Kataoka says BOJ needs to buy JGBs so yield for duration of 10 years and longer declines, while stating that BOJ should make it clear it will ease if achieving the price target is delayed by domestic factors BOJ also raises assessment on capex and view of consumption.

Back in October, the BOJ said in its economic outlook: "With regard to the risk balance, upside and downside risks to economic activity are generally balanced, and risks to prices are skewed to the downside."

No such risks cited in today's policy statement.

There is a slight tweak on business investment:

Today: Business fixed investment has continued on an increasing trend


September: Business fixed investment has been on a moderate increasing trend

And The BOJ notes "business sentiment improving" in today's statement.

Yen is modestly weaker on the statement:

Of course, it's just coincidence but we note that Ethereum and Bitcoin are selling off after the statement...

It's interesting that 'the European debt problem' remains one of the BOJ's key worries... but not 'Japan's debt problem'.