Illuminati Press
Latest news from around the world.

Bank of Japan vows limitless defence of yield target

0


SINGAPORE : The Bank of Japan on Thursday maintained its massive stimulus programme and a pledge to keep interest rates low, reinforcing its resolve to support a fragile economy.

The central bank also said it will offer to buy unlimited amount of 10-year government bonds to defend an implicit 0.25 per cent yield cap around its zero target every market day.

That is a stark contrast with tightening almost everywhere else and the decision drove the yen to a two-decade low on the U.S. dollar, while Japanese government bonds rallied.

Here are some analysts’ views on the move and market reaction:

BART WAKABAYASHI, CO-BRANCH MANAGER, STATE STREET, TOKYO

“The key announcement is the commitment to conducting fixed-rate operations every day. I think they are trying to make the point here that we’re ready to act at any second.

“They’ve quadrupled down on their commitment to this.

“The BOJ is not promoting a weak yen, but their policy is in a way supporting a weak yen…I think most people would have agreed 130 is in play, but now it’s a foregone conclusion. I would bet that London will come in and smack (dollar/yen) higher.”

RAY ATTRILL, HEAD OF FX STRATEGY, NATIONAL AUSTRALIA BANK, SYDNEY

“Effectively the Bank of Japan has doubled down on its yield-curve control target by its offer to buy bonds at 0.25 per cent every day. There no longer needs to be a will-they, won’t-they.”

TOM LEARMOUTH, JAPAN ECONOMIST, CAPITAL ECONOMICS

“(The decision) is unlikely to solve the BoJ’s dilemma.”

“As it comes under further pressure from continued rises in global bond yields, we think the bank will eventually give itself some breathing space by widening the band from ±0.25 per cent to ±0.50 per cent. That could happen at the next meeting on 17th June.

“That said, the full abandonment of yield curve control is a remote prospect.”



Source link

Leave A Reply

Your email address will not be published.