BOJ Delivers Dovish YCC Tweak

The BoJ policy meeting has largely come out in line with market expectations. None of the major policy parameters were shifted, with the policy rate kept at -0.10%, the 10yr yield target at 0%, both maintained Most of the focus was on the language tweak around YCC, with the 1% upper bound referred to as a reference point. This suggests we may yields move beyond this level, but the BoJ will still step in to curb excessive moves.

• The BoJ has also decided to scrap its daily fixed rate bond buying operations. It indicated this could result in 'large side effects". The central bank stated it may increase JGB bond purchases nimbly and it will continue with large scale bond buying operations.
• The forward guidance wasn't changed, whilst the central bank also stands ready to ease again if needed.
• On the inflation forecasts the current fiscal year forecast was raised to 2.8% from 2.5%, but importantly by 2025 inflation is still expected to back under the 2% target (1.7% versus the 1.6% prior forecast).
• All in all the market is seeing this as a dovish YCC tweak. USD/JPY has rallied in response. We got to highs of 150.10, but now sit a little lower, last near 149.95/00.
• Note Ueda's press conference comes later, 3:30pm Tokyo time.