MNI BRIEF: BOJ Keeps YCC, Maintains Forward Guidance On Rates

The Bank of Japan board left monetary policy settings unchanged at its last meeting under Governor Haruhiko Kuroda on Friday, stating the economy continued moving in line with its baseline scenario despite lingering downside risks and high uncertainties.

The BOJ kept the target for the overnight interest rate at -0.1% and will purchase a necessary amount of JGBs - without setting an upper limit - so that 10-year JGB yield will remain within a 50bp band around zero percent.

The board maintained forward guidance for the policy rates, indicating the policymakers are vigilant against the near-term downside risk to economy and saw the need to keep the easing bias regarding the outlook for monetary policy.

“For the time being, while closing monitoring the impact of Covid-19, the BOJ will support financing, mainly of firms, and maintain stability in financial markets, and will not hesitate take additional easing measures if necessary, it also expects short- and long-term interest rates to remain at their present or lower levels,” the BOJ said.

The BOJ also left the scale of its purchases of ETFs (exchange-traded funds) and J-REITs (Japan real estate investment trusts) unchanged with upper limits of about JPY12 trillion and about JPY180 billion, respectively, in terms of their annual pace.