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Senior Economist Alvin Liew at UOB Group assesses the latest BoJ monetary policy meeting.

Key Quotes

“The Bank of Japan (BOJ) kept its policy measures unchanged at its March Monetary Policy Meeting today (19 Mar) but the key focus was on its review of the BOJ’s monetary policy framework where it announced measures to make its monetary easing policy more sustainable and effective. The key measures include widening the fluctuation band for yield curve control of the 10-year JGB yield target of 0% at +/- 25bps (with flexibility on the downside), removing the annual purchase target for ETFs, provide incentive for financial institutions to tap into an “Interest Scheme” to help cushion the negative effect of additional rate cuts.”

“While there were quite a few adjustment measures from the BOJ’s Assessment, the market response is fairly muted, partly because the adjustments are small and the measures did not portend any imminent danger of BOJ lowering rates further. We maintain our view for the BOJ to do more and enhance its monetary policy easing further in the next MPM, most likely through re-accelerating its JGB purchases and expanding its lending facilities to Japanese corporates and SMEs.”