Bank of Japan: Financial Policy Meeting Preview
2023-01-16
■ The current situation of the financial policy maintains the majority of the forecast market, but the policy correction observation tends to rise
■ On the one hand, the Bank of Japan adopts the policy of continuing to loosen monetary policy, on the other hand, the short-term financial market will carry out policy amendments after April this year
This article will sort out the trend of the Bank of Japan's financial policy decision meeting (hereinafter referred to as the policy meeting) held on January 17 and 18. For this policy meeting, the market expects that monetary policy will maintain the status quo. However, there are many negative reasons, such as "the time to introduce new measures is too short after the policy was revised in December last year", "it is difficult to restore the market function even if the allowable range of change in the yield of 10-year treasury bonds is increased", so it is impossible to predict. In contrast, the Bank of Japan pointed out in the "main opinions of the financial policy decision meeting (held on the 19th and 20th of the same month)" released on December 28 last year that "the expansion of the range of changes in long-term interest rates is conducive to the continuous strengthening of long-term and short-term interest rate operation (Yield Curve Control-YCC)". Most people believed that "it is necessary to continue to relax the financial policy at present". In addition, although President Kuroda of the Bank of Japan made several speeches at the end of the year and the beginning of the year, he did not confirm that he would change the contents of the policy in advance.
Since the announcement of so me operational adjustments of YCC at the policy meeting last December, the financial market has remained unstable. When various reporting agencies publish reports such as "The Bank of Japan will check the side effects of large-scale easing", the situation of yen appreciation in the foreign exchange market frequently occurs. The Japanese government bond market has also implemented various government bond purchase operations and joint guarantee fund supply operations of Bank of Japan, but on the morning of January 13, the 10-year government bond yield exceeded the upper limit of the allowable range of change (positive 0.50%). On the previous day, the Bank of Japan's treasury bond purchase reached the largest scale in history (about 4.6 trillion yen) in one day, and the financial market and the Bank of Japan's offensive and defensive war intensified. In addition, in the OIS (Overnight Index Swap) market, the new system of the Bank of Japan will be implemented in April this year, and the negative interest rate policy will also be cancelled.
Except for fresh food in the Tokyo Metropolitan Consumer Price Index (CPI) for December last year announced on January 10, the core index rose 4.0% year-on-year to reach the highest level since April 1982. The specific content is that 376 of all 522 varieties have increased in price, and the pressure of rising prices is widespread, which can easily lead to policy revisions by the Bank of Japan. In the "Economic Price Situation Outlook (Outlook Report)" released after the January policy meeting, the increase rate of core CPI by 2024 is expected to increase to about 2% compared with the previous year, and the Bank of Japan's policy revision in the financial market Observation will be further improved. Want to maintain a vigilant posture.