Bank Of Japan Leaves Policy Unchanged, Downgrades Inflation, Continues 'Stealth' Taper

Yen is weaker following The BOJ's decision (with one dissent) to leave policy rates unchanged and maintain their JGB holdings target. BoJ did downgrade their inflation outlook but made no mention of its ongoing 'stealth' bond-buying taper.

  • BOJ Maintains 10-Year JGB Yield Target at About 0.000%

  • BOJ Maintains Policy Balance Rate at -0.100%

  • Bank of Japan Downgrades Assessment of CPI - BOJ Sees CPI in Range of 0.5% to 1.0%

  • As expected, the BOJ has retained the 80 trillion yen bond-buying target that hasn't been hit for some time now. This showcases just how careful the BOJ is about even the most minor tweak in its policy guidance.

The reaction is a weaker yen for now...

While The Bank of Japan's policies drift further and further away from The Fed and ECB (admittedly BoJ has tapered down its bond-buying ever so quietly), it is hardly surprising that Kuroda didn't go full hawktard as economic data has been dismal this year and a recession looms...

Japanese economic data is the most disappointing since 2014...

And the economy is shrinking once again...


While no official policy adjustment has been made, The BoJ has been stealth tapering for months...

“Market players have come to realize that the bond-purchase operations aren’t directly linked to monetary policy,” said Mari Iwashita, chief market economist at Daiwa Securities Co. in Tokyo. “Their action is dependent on conditions and does not indicate anything special in store.”

Again no mention of this tapering as The BoJ attempts to maintain the bond-buying program pace that it promised.

As @dmwlsw joked so accurately:

"BOJ doesn’t disappoint. Just continues to buy everything."

Kathy Matsui of Goldman Sachs summed things up nicely when she spoke to Bloomberg Television:

"When it comes to full blown 'let's end QE and lets begin the tapering process,' until inflation approaches something closer to the BOJ target of 2 percent, I think we are looking at continued central bank divergence for quite some time."