Three major changes are announced by BoJ today, as results of the policy review. Firstly, short-term interest rate is held at -0.1%. An “Interest Scheme to Promote Lending” will be established to enable the central bank to “cut short- and long-term interest rates nimbly while considering the impact of the functioning of the financial intermediation”.
Secondly, 10-year JGB yield target is kept at around 0%. But it’s now allowed to fluctuate in a wider band between plus and minus 0.25%. A “fixed-rate purchase operations for consecutive days” will be introduced to set an upper limit on interest rates when necessary.
Thirdly, BoJ will purchase ETF and J-REITS with upper limits of about JPY 12T and JPY 180B respectively. But the reference to JPY 6T annual ETF purchase target was dropped.
