BoJ keeps policy unchanged as expected with rates at -0.10% and QQE with yield curve control maintained to target 10yr JGB yields at around 0% with its decision unanimous

Says:

• Leaves forward guidance unchanged in which it expects short- and long-term rates to remain at present or lower levels.


• Maintains guidance on policy bias that it will take additional easing steps without hesitation as needed with an eye on the pandemic's impact on the economy.


• Extends pandemic relief program. Note: Newswire initially reported that the BoJ decided to end the pandemic-relief funding programme at end of the month as scheduled.


• Decided to phase out the pandemic funding programme and shift to fund provision step that meets wide range of financial needs.


• Will set no limit on amount of fund-provision under market operation targeting wide range of firms against pooled collateral.


• Must be vigilant to financial and FX market moves, as well as their impact on Japan's economy and prices.


• Japan's core consumer inflation is moving around 2.5 and inflation expectations are heightening.


• Japan's core consumer inflation is likely to accelerate toward year-end on rising energy, food and durable goods prices but rise in core consumer inflation is likely to slow thereafter.


• Upward price pressure likely to heighten as a trend.

Reaction details (04:12)

• USD/JPY was volatile and immediately moved higher by 50 pips to 144.90 from 144.50 but then retreated 6 minutes later before returning back to pre-announcement levels.

Analysis details (04:23)

• BoJ kept policy settings unchanged as expected with rates kept at -0.10% and QQE with YCC settings unchanged which was made by unanimous decision (prev. 8-1) given the replacement of staunch Kataoka whose term ended in July. The central bank maintained its dovish forward guidance and policy bias, as well as refrained from any major jawboning on the currency but did note heightening inflation expectations and for core consumer inflation to accelerate toward year-end before slowing thereafter.

22 Sep 2022 - 03:51- Fixed IncomeImportant- Source: Newswires