00:00Is this what you were expecting well not quite so fixing the long term interest rate. I think I would say it's one of the legitimate monetary policy although I mean it is definitely quote unquote unconventional but. But look. Well let's look at the what Bank of Japan did. Can we see anything that would actually reflect the economy. You know 10 year rate was minus zero point three percent. Two months ago . How does raising long term interest rate rate help reflate the economy. Does this do something positive for the banking sector . They perhaps have been listening to the banking sector who said that their business model has been eroded by negative interest rates and therefore have adjusted the policy with the hope that maybe more lending happens is that is that the reflation force Wow. Well he does have the current banking industry but I would say Japanese banking system are outdated. These banks are very inefficient. So they need to restructure. The reason they're unprofitable is not not because of the strange might that Boise Bank of Japan is doing. That's because their business is unprofitable. So by helping these inefficient industry. I don't think bank with Japan is actually helping the Japanese economy. Stay with us. Joining us bring you into the conversation do you see something here in the suite of policy announcements these new these additional actions we've seen for the VHA. Anything that you say yes that is reflation read that is going to help the BMJ in its battle to drive up CPI. I would say that some of the decisions are probably quite sensible given the amount of pressure and the amount of criticism that the Bank of Japan has been under this year and particularly I think with the ETF Slate broaden that out. I think that's a sensible move . I mean I did read a statistic to suggest that the Bank of Japan is becoming a top five owner of something like 81 or 82 of the two to five stocks in the next two to five. So to broaden that out. Well that's quite sensible. I think also to bring in some flexibility into the inflation target again probably quite sensible given the amount of pressure that they've been under the criticism that they've been failing to hit that target. So they've added a bit of flexibility into that. And see if we go back to the start of the week even the Australians added a little bit of flexibility into the wording around the inflation target to see. So this might not be the only central bank or the end of the central bank's movement towards doing this . There are some sensible movements whether or not it's really going to achieve an acceleration and the reflation of of Japan really remains completely nuts. And let's deal with the immediate market action Jane as well because we've got the yen weaker by nine tenths of a percent against the dollar. Perhaps that would be at least in the short term something that Beijing wouldn't be disappointed to see given the reaction we've seen to but some previous announcements from the BMJ. But I want to draw your attention to what we've seen in the bond market. This is the 10 year yields on the JCB. We saw it in the initial aftermath as you just saw this morning. The initial aftermath of the announcement we saw it spike back up out of negative territory into positive hit zero for the first time in months . But then that was short lived. And now it goes back down again . I don't think the market is still very uncertain. How exactly is the Bank of Japan going to organize its strategy to get its exact post Dax. This is going to be difficult so this is going to be in progress. It's going to be watching this as it pans out too. We have seen relief for the banking stocks. There isn't another move in negative interest rates that the risk and hope that maybe the UK will be elected to stick and we've seen that come through banking stocks helping the Nikkei 2 to 5 go up . And I think that has really dragged on the yen higher too . But I think in respect of the movements in dollar yen I think they're going to remain governed really by the Fed in the US UK and we'll look ahead to that in a little while to you Yakubu in Tokyo. I know that before this announcement you expected that the BMJ might step away from its 2 percent inflation target . Jane here in the studio does see some increasing flexibility around that target given what they've said today. How do you view the target now Well Bill Gates still maintains that to the same flinched target but that their monetary stances. I would say less aggress less accommodative than before they before they were saying that they would do anything they can to achieve 2 percent inflation in two years. Now they're saying they do like two percent inflation but they don't really know when they when they can achieve it . So clearly there is less monetary accommodation in the Bank of Japan's monetary policy today less monetary accommodation. What do you make of their commitment to target the yield curve away away from setting specific monetary stimulus targets per year and towards doing what they need to to get the yields on the yield curve where they want them to be. How are they going to achieve that do you think. We're still learning all the details about how that's going to work. I guess right. Well in the same way in the same way that the bank with a bank can control the short term interest rate. Bank of Japan can theoretically control long term interest rate. You know they can buy or even sell the KGB at maturity dates. They say that so they can. They can't control the interest rate. That's I don't think they have that much difficulty. But the problem is. OK then the KGB market is going to be rigged. It's not going to be a market. It's it's not a market price. It's a fixed price. And we don't really know what the true long term Japanese interest that should be Jane that aging bee market rigged the stock market rigged other people's words not mine necessarily is that is that the way you see the world. I think what we're saying is if we look at the amount of interaction of central banks content of easy negative interest rates etc. across the stock markets we really do have to ask ourselves you know stock markets valuations stock markets particularly is it justified given the very slow pace of .

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BOJ Shifts Policy Framework to Target Japan's Yield Curve

The Bank of Japan shifted the focus of its monetary stimulus away from a rigid target for expanding the supply of money, to controlling the shape of yields across different maturities. Governor Haruhiko Kuroda led his board in keeping the benchmark rate for a share of bank reserves at negative 0.1 percent. The central bank said that the monetary base target, which previously had been set at annual increases of 80 trillion yen ($780 billion), may now fluctuate in the short term as policy makers seek to control the yield curve. Japan Macro Advisors Chief Economist Takuji Okubo and Rabobank Senior Foreign-Exchange Strategist Jane Foley discuss with Bloomberg's Anna Edwards on "Countdown."