BOJ monetary policy decision 31.07.2018

  • Cuts amount to which negative rate applies, starts forward guidances
  • Maintains Interest Rate on Excess Reserves (IOER) at -0.10%
  • Maintains 10-year JGB Yield Curve Control at ~0.00%  to allow upward and downward movement in 10-yr yield
  • Maintains annual pace of JGB holdings at ¥80T
  • Maintains annual ETF purchases at ¥6.0T, adjusts allocation more to Topix rather than Nikkei
  • Now to have ¥4.2T that track Topix (prior ¥2.7T); ¥1.8T to track Nikkei
  • BOJ to maintain very low rates for an extended period of time
  • Median forecast for core CPI FY 2018/19 at 1.1% vs 1.3% prior
  • Long term rates may move upwards or downwards to some extend depending on the economy, price developments
  • Will buy JGB’s promptly and appropriately in the event of rapid increases in yields

JPY weakens after the market speculated on changes. Well the changes are but the tweaks remain as smooth as possible as I expected.
USDJPY 111.35 up from 110.85 prior to the announcement as the market was hoping for something better.
I ‘d say we trade the range 110.60-111.60 until further notice.
Going forward, I expect more volatility to creep into the JPY around BOJ asset purchase announcement times


The link to the monetary policy

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