We asked Izuru Kato, Chief Economist of Totan Research, about the Bank of Japan's decision to revise its current large-scale monetary easing measures.

“There are many Tomadou market participants.”


How did you react to the Bank of Japan's decision this time?


It was a great surprise.

The market has been distorted by monetary policy, so the change itself is welcome, but it is quite different from the explanations so far, and many market participants are confused.

Normally, the outlook for future inflation would be revised upwards, and interest rates would generally be raised, but this time the outlook remains unchanged.

It is a very vague explanation.

“First step toward monetary tightening”


Although the BOJ denies this, some market participants see it as a de facto monetary tightening.

What do you think about this?


The Bank of Japan explained that it was not a tightening, but it took it as a first step toward de facto monetary tightening.

On the other hand, it's certainly still in the realm of fine-tuning.

It is difficult for the BOJ to steer the BOJ without changing its policy amid concerns that the rate of inflation will rise further and monetary tightening is progressing worldwide.

``Long-term mortgage interest rates may rise somewhat''


impact on our lives.


While it's not a big rate hike, a rise in 10-year Treasury yields could give long-term mortgage rates some lift.

Also, if the yen continues to appreciate as it is, the pace of rising food prices stemming from higher import prices may slow down somewhat.

"This correction is quite irregular"


Is this revision of the monetary easing measures just an emergency measure, or is there a possibility that it will continue in the future?


Since the revisions this time are quite irregular, we believe it is unlikely that the BOJ will change policies in the same way as it did this time for the reason of alleviating distortions in market functioning.

In addition, since there is no standard for how much of that distortion is tolerable, Governor Kuroda's tenure will remain the same. Isn't there?