The news that economic policy minister Yoshitaka Shindo would be in attendance at the Bank of Japan’s policy meeting had sparked market speculation about a shift in policy sooner than expected. It is rare for a minister to sit in a BoJ meeting and, in the past, when the Bank delivered major policy decisions, senior government officials attended the meeting, thus the market had expected a somewhat hawkish move by the BoJ.
But it turned out that this was just the market’s wishful thinking. In line with our view, the Bank of Japan unanimously decided to maintain its policy rate at -0.1% and its 10-year yield target at 0.0% while keeping its dovish forward guidance “take additional monetary easing steps without hesitation if needed”, which may have disappointed some market players the most.
Read More : Bank of Japan Takes Steps Toward Normalization, but Full Transition Remains Incomplete