Bank of Japan made no changes to the Yield curve control policy. It kept the band at +/- 0.50% and amended the rules for a fund supply market operation. Under the amended rules, BoJ can offer funds upto 10 years against collateral to financial institutions for both fixed and variable rate loans.
Post the announcement, JGBs yields quickly fell to lows of 0.36%.
I anticipated JPY to depreciate after a pull back on the sharp fall in yields but nah nah nah.. JPY completely reversed course.
The price development only goes to show that the market anticipates YCC to likely end in march which is the last policy announcement by Governor Kuroda before the end of his term. The inflation data released today further emboldens the expectation. Japan's core consumer prices in December rose 4.0% from a year earlier, double the central bank's 2% target, hitting a fresh 41-year high.
16-17th Feb - hearing of the BOJ nominees in Lower house
20 -21st Feb - hearing of the BOJ nominees in Upper house
9th - 10th March - BoJ Policy meeting
19th March - Masayoshi Amamiya and Masazumi Wakatabe term ends
8th April - BoJ Governor Kuroda's term ends
27th - 28th April - BoJ policy meeting under the new Governor
The new Governor is likely to be confirmed in February.
USDJPY has been trading in a channel.
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