November 02, 2023 01:32 GMT
MNI BOJ Review- October 2023: An Increase In YCC Flexibility
The BOJ introduced a new level of flexibility to its yield curve control (YCC) by suspending the daily fixed rate operation on 10-year JGBs.
- During the Bank of Japan's (BOJ) Monetary Policy Meeting (MPM) held on October 30-31, the widely expected decision to keep the policy rate at -0.1% was unanimously endorsed. However, the BOJ introduced a new level of flexibility to its yield curve control (YCC) by suspending the daily fixed rate operation on 10-year JGBs.
- The BOJ's decision to define the 1% upper YCC limit as a "reference" suggests the potential for it to slightly exceed this threshold.
- The exact extent of this newfound flexibility remains a topic of discussion, although Governor Ueda asserted that a significant increase above 1% is improbable.
- In its quarterly Outlook Report, the BOJ made some upward adjustments to its inflation projections. FY2023 and FY2024 core CPI forecasts were raised to +2.8%, while FY2025 was slightly increased from +1.6% to +1.7%.
- A noteworthy addition to the report was a new sentence on the front page: "toward the end of the projection period, underlying CPI inflation is likely to increase gradually toward achieving the price stability target." This statement hints at a possible upgrade in the BOJ's view on the long-term inflation trend.
- Full review here: