The Bank Board Member of Japan (BOJ), Asahi Noguchi, said Thursday that the “recent rise in long -term rates will probably not have an impact on our new bond purchase reduction plan that will be decided in June.”
Outstanding comments
The most important thing is that things are different now that during the period we had YCC.
We do not look at the size of our JGB purchase from the point of view of monetary policy.
By reducing the purchase of bonds, giving predictability to the market, while flexibility is maintained, it is the most important.
If the current bond reduction rhythm must be maintained beyond April 2026 will be something that will be discussed before the next policy meeting.
The recent rise in superlargo bond yields is probably driven by the global trend in yields, they are fast but not necessarily abnormal.
I do not think it is appropriate to intervene recklessly to correct the movements of bond yields.
The uncertainty cloud is clearing a bit in the commercial tension between the US and China.
The markets are restoring some calm, although the uncertainty about the US tariff policy. And its impact on the economy of Japan is high.
The BOJ should not act on rates when there is a lack of clarity about economic perspectives.
Market reaction
The USD/JPY pair remains in its range about 143.30, at the time of writing, lowering 0.24% in the day.
Japan Faqs Bank
The Bank of Japan (BOJ) is the Japanese Central Bank, which sets the country’s monetary policy. Its mandate is to issue tickets and carry out monetary and foreign exchange control to guarantee the stability of prices, which means an inflation objective around 2%.
The Bank of Japan has embarked on an ultralaxa monetary policy since 2013 in order to stimulate the economy and feed inflation in the middle of a low inflation environment. The bank’s policy is based on the Quantitative and Qualitative Easing (QQE), or ticket printing to buy assets such as state or business bonds to provide liquidity. In 2016, the Bank redoubled its strategy and relaxed even more policy by introducing negative interest rates and then directly controlling the performance of its state bonds to 10 years.
The massive stimulus of the Bank of Japan has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to combat inflation levels that have been in historical maximums. Japan Bank’s policy to maintain low types has caused an increase in differential with other currencies, dragging the value of YEN.
The weakness of the YEN and the rebound in world energy prices have caused an increase in Japanese inflation, which has exceeded the 2% objective set by the Bank of Japan. Even so, the Bank of Japan judges that the sustainable and stable achievement of the 2%objective is not yet glimpsed, so an abrupt change of current monetary policy seems unlikely.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
