Is the Bank of Japan's pivot just around the corner?
On January 31, the Bank of Japan released a summary of the opinions of members of the January policy meetingIf the target is imminent, the end of the negative interest rate policy will be considered.
Analysts believe that even the governor of the Bank of Japan, Kazuo Ueda, has not yet determined the specific timing of the policy exit,But the minutes strengthened the signal that a rate hike was imminent. The market is broad** that the Bank of Japan may end its negative interest rate policy in March or April this year.
At the same time, the Bank of Japan's third large-scale purchase cut since the policy was implemented in 2016 set the stage for a tightening of monetary policy in March and April.
With the release of the summary of comments, swap market pricing is displayedThe probability of a rate hike by the Bank of Japan in March rose from 29% to 32%.。Japan opened with both stocks and bonds falling today, and the yen strengthened.
The Nikkei 225 index opened at **09%, Japan's Topix index opened **05%, then turned up. As of press time, the Nikkei 225 index rose 035%, Japan's Topix index rose 034%。
Japan's 10-year government bond yield**35 basis points to 074%, following the rise of Japanese government bond yields, the yen **015% to 14737, and then turned down. As of press time, the Japanese yen is **0 against the US dollar13% to 14779。
At the Bank of Japan's January interest rate meeting, some members emphasized that the current economic situation provides Japan with the "best opportunity" to raise interest rates for the first time since 2007, thus ending the last negative interest rate policy in the world.
In terms of economic fundamentals,The BOJ believes that the economy remains generally resilient and continues to recover modestly, with a growing number of companies reporting that they are concerned about labor shortages and have a positive attitude towards wage increases as profits improve. In addition, the investment plan of fixed assets of enterprises promoted by raw materials is also gradually recovering; Japan** said it was informed that the Noto Peninsula** had limited impact on production plans in January.
On the inflation front, the conditions for ending negative interest rate policy are increasing given the expected wage growth from wage negotiations this spring, as well as an overall trend of improvement in wages and prices. If wages are conducive to increasing demand and driving prices, a virtuous economic cycle will emerge, and it is necessary to continue to pay attention to this year's wage growth data. One of the nine board members said: "The conditions for ending the YCC are being met. ”
In terms of monetary policy,The 2% stable inflation target remains uncertain, but the year-on-year inflation rate is expected to remain around 2% after spring wage talks, services rise**. The Bank of Japan said it was "patient" to stick to monetary easing and would consider ending the negative interest rate policy if the positive cycle of wage inflation is confirmed and is expected to reach the ** target.
While the BOJ has now agreed on the need to start discussions about exiting the YCC, it has not yetA consensus was reached on a specific exit timetable, and the Bank of Japan will issue its next policy decision on March 19.
According to reports,The Bank of Japan has once again massively cut bond purchases under the YCC policy, and the analysis believes that this is because the central bank no longer needs to be very aggressive in keeping interest rates down by buying bonds.
As of Tuesday, the central bank had purchased a total of 5The 86 trillion yen ($39.6 billion) in bonds was the lowest level in nearly two years. This is the first time in nearly two years that the total monthly bond purchases have fallen below 6 trillion yen, and it is also the third consecutive month of month-on-month decline.
Not only is this the third large-scale reduction in purchases since the policy was implemented in 2016, but it also marks the BOJ's laying the groundwork for tightening monetary policy. Bank of Japan Governor Kazuo Ueda stressed last week that his goal is to ensure that exiting negative interest rates does not lead to market chaos or unnecessary volatility before and after.
Since the introduction of the YCC policy in September 2016, the Bank of Japan has previously made two large-scale cuts in bond purchases:
The first reduction in February 2020,At that time, monthly purchases fell to about 48 trillion yen. In the wake of the full-blown pandemic, the central bank adjusted its bond-buying policy to keep long-term interest rates near zero, while adopting a YCC policy to balance the stability of the bond market with the profitability of banks.Naomi Muguruma, chief fixed income strategist at Mitsubishi UFJ Morgan Stanley**, pointed outPart of the reason for the cuts is to restore the normal functioning of the bond market. The Bank of Japan aims to allow market forces to play a greater role in pricing and trading by reducing intervention. Since October 2023, when the central bank decided to increase the flexibility of the YCC policy, the central bank's bond purchases have been on a downward trend. Long-term interest rates have risen from 0 in mid-January55% rose slightly to 07%, but still well below the 1% cap target, there is still room for a rate hike.The second reduction in March 2021,The central bank has expanded the target band for long-term interest rates, allowing long-term interest rates to fluctuate by 025% in order to maintain economic stability under the impact of the epidemic. From April 2021 to February 2022, monthly bond purchases remained at around 5 trillion yen.
Wall Street news, welcome **app to see more.