Free Trial

(M2) Correction Extends


Late Session Rebound


(M2) Corrective Cycle Remains In Play


(M2) Gains Still Considered Corrective

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access
MNI (Tokyo)

The Bank of Japan looks set to formalize the trading band currently tolerated for 10-year JGBs and clarify its stance on purchases of Exchange Traded Funds at the March meeting, as it prepares to tweak and not radically overhaul its strategy when policymakers finally lay out the conclusions of the policy review set up in November.

The board will likely reject calls to widen the band it is happy to see JGBs trading in, as such a move would not be consistent with controlling yields at overall low levels along the curve at a time the BOJ tries to help engineer the economy's recovery from the Covid-19 pandemic.

Although its is certainly not the aim, bank officials are cognizant that the outcome of the strategy review could be interpreted as the bank intending to tighten its current easy policy and widening the range could send JGB yields higher, which in turn will destabilize financial markets ahead of the end of fiscal year.


But the board could clarify its position on just how much flexibility it is prepared to tolerate on the JGB range via a formal policy statement which it would hope could both boost transparency and to deepen communication with the financial markets.

The current range, which sees a band of 20 bps either side of the 0% target for 10-year JGBs, is based on remarks by BOJ Governor Haruhiko Kuroda and not official guidance in policy statements.

The bank will likely confirm that is sees a sharp fall in longer-dated yields as undesirable, noting that some volatility is necessary to keep markets functioning correctly.

The BOJ's markets operations department could publish its April bond buying schedule on the same day as the Board's policy decision and strategy review are released, again a move that would be seen by policymakers as offering greater transparency..


The BOJ is also set to reword the section of the post-meeting policy statement that covers prioritized purchases of ETFs. It will largely confirm its current stance, leaving the upper limit of purchases at an annual JPY12 trillion as the Board will not look to trigger market negative reaction, although it may look to clarify that purchases will only be undertaken when term premiums are under pressure.

The main policy settings, including the benchmark overnight deposit rate, will almost certainly be left unchanged, although the BOJ will reconfirm that it will deepen negative interest rates if necessary, taking any unfavorable impact on banks' profitability into consideration.

Both the policy decision and the outcome of the strategy review are due to be released Friday March 19 around 0300 GMT.

MNI Tokyo Bureau | +81 90-2175-0040 |
MNI Tokyo Bureau | +81 90-2175-0040 |

To read the full story

Why Subscribe to

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.