Home Economy News Morning Bid: Bank of Japan goes big

Morning Bid: Bank of Japan goes big


Morning Bid: Bank of Japan goes big By Reuters

Breaking News



Published Mar 19, 2024 01:32AM ET

© Reuters. FILE PHOTO: Japanese national flag is hoisted atop the headquarters of Bank of Japan in Tokyo, Japan September 20, 2023. REUTERS/Issei Kato/File Photo

A look at the day ahead in European and global markets from Ankur Banerjee

In a well-telegraphed move, the Bank of Japan delivered what investors had been waiting for – ending its negative interest rate policy after eight years. The pivot marks the country’s first rate hike since 2007.

Not just that, the central bank abandoned yield curve control, a policy in place since 2016 that capped long-term interest rates around zero, and also said it would no long purchase risky assets such as exchange-traded funds (ETF) and Japanese real estate investment trusts.

And just like that, the era of cheap money has come to an end and its impact across the globe, especially in the murkier world of FX carry trades remains to be seen.

Several media reports over the past few weeks had indicated the likelihood of these sweeping moves and that perhaps explains the initial market reaction. Japanese shares were volatile and then rose, while the yen slid to 150 per dollar.

BOJ Governor Kazuo Ueda is due to speak at 0630 GMT to further explain the move and the market will focus on the tone to gauge whether the last dove in the developed market is ready to tighten more.

The BOJ though has pledged to maintain accommodative policy and traders expect rates to remain at zero for some time.

The Reserve Bank of Australia was the other central bank in focus, after it decided to leave interest rates unchanged on Tuesday. The decision was expected though the RBA further watered down its tightening bias, leading the Australian dollar lower.

That left the Aussie/yen cross, often a good measure of investor desire for carry trades and global risk appetite in general, little changed in Asian hours.

European bourses are due to open lower, futures indicate, as traders await the U.S. Federal Reserve’s policy decision on Wednesday.

The central bank is widely expected to stand pat but the focus will be on its economic projections and how many rate cuts it estimates for the year.

Key developments that could influence markets on Tuesday:

Economic events: Wages in euro zone for Q4, euro zone labour costs for Q4; Germany ZEW economic sentiment for March

Morning Bid: Bank of Japan goes big

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News