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Saturday, May 18, 2024

Summary of the BOJ Meeting Minutes, March 2024

Key Takeaways:

  • It was likely that the 2% price stability target would be achieved in a sustainable and stable manner.
  • The BOJ ended the negative interest rate policy by setting the short-term interest rate at around 0 to 0.1% and will continue purchasing JGBs at the same amount as before.
  • The central bank will discontinue purchases of ETFs and J-REITs, and gradually reduce purchases of CP and corporate bonds over the course of a year.

On March 19, 2024, the BOJ announced a change to its monetary policy framework, marking a shift from the period of ultra-loose monetary policy. The BOJ also released its meeting minutes on March 25, 2024.

BOJ Meeting Minutes

The BOJ’s Policy Board assessed that the cycle between wages and prices was coming into sight, and it was likely that the 2% price stability target would be achieved in a sustainable and stable manner by the end of the January 2024 Outlook Report’s projection period.

The BOJ decided to set the short-term interest rate at around 0 to 0.1% by applying a 0.1% interest rate to financial institutions’ current account balances held at the bank, effectively ending the negative interest rate policy.

The bank will continue purchasing Japanese government bonds (JGBs) at the same amount as before and will respond to rapid rises in long-term interest rates.

Additionally, the BOJ will discontinue purchases of exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs), and gradually reduce purchases of commercial paper (CP) and corporate bonds over the course of a year.

Board Members

Board members agreed that Japan’s economy had recovered moderately, and the likelihood of achieving the 2% price stability target had gradually risen. They noted that wage growth was expected to increase as the labor market tightened, and the pass-through of wage increases to prices had been progressing to a certain extent.

However, members also acknowledged extremely high uncertainties surrounding Japan’s economic activity and prices, including developments in overseas economies, commodity prices, and domestic firms’ wage and price-setting behavior.

As the likelihood of achieving the 2% inflation target has increased, the central bank is preparing to normalize its monetary policy while ensuring that the process is gradual and does not cause significant market disruptions.

Market Reaction

USD/JPY has slightly decreased from its high, around -0.14 percent lower from when the BOJ’s Meeting Minutes were released.

USDJPY 1-Minute Price Data
Lazarus
Lazarushttps://ljlnews.com
Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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