Bank of Japan keeps interest rates negative as it sets out flexible yield curve control plans
'In order to encourage the formation of a yield curve, the bank will continue with large-scale Japanese government bond purchases.'
The central bank said its inflation target of 2% «has not yet come in sight», so it will continue its monetary easing course, with yield control.
Bank of Japan maintains negative interest rate
The MPC also unanimously decided to purchase a «necessary amount» of Japanese government bonds (JGB), without setting an upper limit so that 10-year yields will remain at around 0%.
On the yield curve control front, eight out of the nine MPC members voted to continue to allow ten-year JGB yields to fluctuate within a range of plus or minus 0.5 percentage points from the target level, while conducting yield curve control more flexibly.
The BoJ will offer to purchase ten-year government bonds at 1% every business day through fixed-rate purchase options, it said, unless there is a high likelihood that no bid will be submitted.
It added: «In order to encourage the formation of a yield curve that is consistent with the above guideline for market operations, the bank will continue with large-scale JGB purchases and make nimble responses for each maturity by, for example, increasing the amount of JGB purchases and conducting fixed-rate purchase operations and the funds-supplying operations against pooled collateral.»
Beyond JGB, the central bank added it will purchase ETFs and Japanese REITs with upper limits of around ¥12trn and ¥180bn, respectively, with the amounts increasing annually.
It explained it will also purchase corporate bonds at the same pace as it did before the Covid-19 pandemic in order to return to the pre-pandemic level of their outstanding amount of ¥3trn.
The BoJ said there are currently
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