BOJ’s Governor Haruhiko Kuroda said on Monday that the central bank would not stop buying exchange-traded funds (ETFs) or sell them as it tries to make its easing tools more flexible and sustainable under its yield curb control policy. While speaking, Kuroda said its review of the ETF purchases would make it possible for the BOJ to continue easing policy more flexibly and effectively.
In the Meantime, The BOJ removed an explicit guidance to buy ETFs at an annual pace of roughly 6 trillion yen ($55.13 billion) in a review of its policy tools unveiled on Friday. Instead of buying at a set pace, the BOJ said it would step in only when markets destabilise, with a spending ceiling of 12-trillion-yen that was set last year when the initial COVID-19 outbreak jolted stock prices.
Kuroda decided to stick to the 2% inflation target, which he said as a global standard, as it helps stabilize currencies among major economies. Finance Minister also supported the Kuroda’s stance, saying the review of its policy tools including ETF purchases was appropriate.
President Tayyip Erdogan decision to replace Turkey’s hawkish central bank governor with a like-minded critic of high-interest rates has also created volatility in the market.
The yen also seems to be supported based on speculation that Japanese individual investors who have been buying the Turkey lira recently for its high rates would be forced to cut losses and close out their positions.
On the other hand, The Federal Reserve’s chair, Jerome Powell, has been vocally dovish of late which has seen the 2-year government bond yield in decline.
“The recovery is far from complete, so at the Fed we will continue to provide the economy with the support that it needs for as long as it takes…I truly believe that we will emerge from this crisis stronger and better, as we have done so often before,” Powell explained in an interview.
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