In September, the main focus was once again the central banks, the ECB first of all, then the Bank of Japan and the Fed. Expectations were high in all three cases. To announce additional monetary easing in the first two, and guidance on anticipations and credibility in the third. The first two disappointed the market, announcing measures that fell well short of investor anticipations. Already in July, the BoJ opted to keep things as they stood even though a large proportion of investors expected to see further monetary easing. The Fed, for its part, struggled to overcome internal divisions and look beyond a month-by-month horizon, at the risk of making mistakes in its growth projections and damaging its credibility.
The Bank of Japan has delivered its verdict, which guarantees the expansive approach of monetary policy, however, changing its center of gravity. Market participants have yet to digest the meaning of the statement from the Bank of Japan through the words that Governor Haruhiko Kuroda pronounced during press conference.
The biggest change announced by Japan’s central bank regards strategy: now, the Bank of Japan will introduce QE with "yeld curve control". The BoJ will no longer check the monetary base, but rates, both short and long-term, buying long-term government bond in order to ensure that the ten-year yields continue to hover around zero, then at current levels.
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