The BOJ Doubles Down on a Weakening Yen
The central bank is vigorously defending the era of ultra-cheap money, just as the Fed prepares to raise rates more aggressively.
That’ll cost you.
Photographer: Noriko Hayashi/BloombergAny doubt that the Bank of Japan is comfortable with a weak yen should now be eliminated. The central bank is effectively doubling down on the trademark super-easy monetary stance it began developing decades ago — just as the Federal Reserve and its peers become more aggressive in raising rates.
In a statement after its policy meeting Thursday, the BOJ defended its efforts to keep the yield on 10-year government bonds near zero, and said it will buy a limitless amount of debt at fixed rates every business day to hold the line. The bank kept its guidance that rates will stay low or go south, despite Governor Haruhiko Kuroda flagging a possible change to this stance in a speech last week. Anyone looking for even a hint that Japan was prepared to crab-walk away from emergency settings would have been sorely disappointed. Traders, justifiably, hammered the yen.