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BOJ holds its policy steady

On Tuesday, the BOJ board made up its mind to stand pat on its monetary policy in a seven-to-two vote, thus retaining the yield curve control objective adopted in September even as it pushed back the assessed timing of achieving 2% inflation to about fiscal 2018 from fiscal 2017 previously.

The given verdicts were in line with expectations.

Under the latest policy framework, Japan’s major financial institution is going to stabilize the 10-year government bond yield for long-term borrowing costs, approximately 0% and also keep the overnight interest rate about -0.1%. The key objective is to correct the excessively flat profit curve provoked by its negative interest rate policy, which took effect in February.

Japan’s major bank will also maintain its new inflation-overshooting commitment, thus procedding with its monetary easing until inflation surges to 2% from slight dips now and gets anchored around that level.

Additionally, the BOJ’s asset purchases, which aren’t the key policy objective any longer, are going to be maintained at the current tempo of about ¥80 trillion annually.

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