The Bank of Japan has not yet achieved its 2% inflation target.
On the 19th, the result of "inspection" of monetary easing measures was revealed.
The point is to review the method of purchasing ETFs = exchange-traded funds that affect the stock market.
He
also clarified his stance of accepting fluctuations
of "plus or minus
0.25%
" in long-term interest rates, which are the pillar of monetary policy
.
The result of this inspection.
What is the aim?
Review of ETF purchasing methods
As part of its monetary easing measures, the Bank of Japan is purchasing ETFs that make multiple shares together.
The purchase aim is to "work on the risk premium," that is, to alleviate the psychological deterioration of market participants that creates pressure to lower stock prices.
The Bank of Japan purchases ETFs up to 12 trillion yen annually as part of large-scale monetary easing measures.
Regarding ETF purchases, while leaving the "upper limit" of about 12 trillion yen per year, the "principle policy" of about 6 trillion yen per year will be eliminated, and the purchase will show the price movement of the entire market. It is limited to those linked to topics.
So far,
in addition to the "Tokyo Stock Price Index" calculated based on
the
market capitalization of
all 2000 or more stocks listed on the
First Section of the Tokyo Stock Exchange, the stock prices of 225 representative stocks listed. I also bought ETFs that are managed in conjunction with the "Nikkei Stock Average" calculated based on.
However, the market capitalization of ETFs held by the Bank of Japan accounts for about 7% of the total stocks of companies listed on the First Section of the Tokyo Stock Exchange, and indirectly held stocks are partially biased, distorting price formation in the market. It was also pointed out that there was.
With this in mind, the Bank of Japan has decided to purchase only those that are linked to the topics in order to more widely reflect the movements of the entire market in this inspection.
Allows fluctuations in long-term interest rates "plus or minus 0.25%"
As a result of "inspection" of monetary easing measures, the Bank of Japan has clarified that the fluctuation range of long-term interest rates, which is about 0%, will be about plus or minus 0.25%.
On top of that, with the aim of curbing a significant rise in interest rates that exceed this fluctuation range, we will strengthen measures called "limit operations" to buy government bonds at a specified yield indefinitely, and purchase continuously over a certain period of time. We have introduced a system that enables you to do so.
The Bank of Japan has conducted "limit operations" when long-term interest rates have risen, but the Bank of Japan aims to show that it is important for long-term interest rates to stabilize at low levels by strengthening this measure.
Monetary policy after taking office as Governor Kuroda
Governor Kuroda of the Bank of Japan took office in March 2013.
He declared that he would achieve the price increase target of 2% in about two years, and launched a large-scale monetary easing measure at the monetary policy decision meeting immediately after taking office.
The pillar was to significantly increase the purchase of government bonds and supply a large amount of funds to the market, and it was called "Kuroda Bazooka".
In the financial markets, the yen depreciated and stock prices rose at a stretch, but the following year, the consumption tax hike and the sharp drop in crude oil prices will affect the Japanese economy.
As the inflation rate slowed, the Bank of Japan decided in October 2014 to make additional easing in a surprising manner in the market.
We have further increased the amount of money available in the world and accelerated the pace of purchases of ETFs.
However, the price target could not be achieved even after that, and in January 2016, the Bank of Japan finally decided to introduce a "negative interest rate policy".
This was the first policy in the history of the Bank of Japan to apply a negative interest rate to a part of the "current deposits" that financial institutions deposit with the Bank of Japan, but there are growing voices that it will have a negative impact on asset management and profits of financial institutions. went.
In September 2016, the Bank of Japan conducted a "comprehensive verification" of monetary easing in order to achieve price targets as soon as possible while considering these "side effects."
We decided to introduce monetary easing measures to keep short-term interest rates negative and keep long-term interest rates at around 0%, and the main axis of monetary policy shifted from "quantity" to "interest rates" again.
Since last year, we have further strengthened monetary easing to support the economies affected by the new coronavirus.
As a result of such large-scale easing, the balance of government bonds held by the Bank of Japan was 545 trillion yen as of the end of December last year, accounting for 44% of the total.
The market capitalization of ETFs held by the Bank of Japan also accounts for approximately 7% of the total shares of companies listed on the First Section of the Tokyo Stock Exchange.
However, according to the latest outlook for the economy and prices announced by the Bank of Japan in January, the inflation rate is expected to remain at + 0.7% in 2022, achieving the target by April 2023, the term of office of Governor Kuroda. Is in an extremely difficult situation.
Governor Kuroda "Inspection for Continuation of Mitigation"
The Bank of Japan's Governor Kuroda said at a press conference after the meeting to decide monetary policy, "This policy response has increased sustainability and agility. We will continue to carry out strong monetary easing to achieve the price stability target of 2%. I will go. "
He emphasized that it is too early to discuss the exit of monetary easing, in response to the view that this inspection will lead to a recession in monetary easing.
In addition, he said that he lost the guideline of the purchase amount of about 6 trillion yen per year in the purchase of ETFs, "I have no idea to reduce it because of flexible purchases", and when the stock price fell sharply He showed the idea of making a drastic purchase.
In addition, the aim of purchasing ETFs only to be linked to topics is to prevent a biased effect on individual stocks.
On the other hand, he emphasized that there is no intention to widen the fluctuation range of long-term interest rates, which is one of the pillars of the easing measures, by clearly stating that the fluctuation range is about plus or minus 0.25%.
Expert "The aim is to reduce side effects"
Regarding the BOJ's "inspection," Takahide Kiuchi, an executive economist at Nomura Research Institute, who served as a deliberation committee member of the BOJ until four years ago, said, "For the BOJ, from aggressive monetary easing as a countermeasure to the new corona, It has the meaning of a setup to return to normal monetary policy. In addition, along with that, the decline in market function, financial soundness, and finance, which have been pointed out as side effects of the current large-scale monetary easing measures, The aim is to alleviate the deterioration of institutional profits. "
On top of that, "I have the impression that the Bank of Japan is steadily narrowing down its policy targets, such as removing the purchase policy of ETFs at a pace of 6 trillion yen per year. I can't do that, and I think there is no other way but to manage it so that the policy does not collapse while suppressing side effects by making corrections like this one. "