BOJ Summary of Statements on Monetary Policy

May 31, 2019
BOJ announces start date for the terms and conditions for the Securities Lending Facility (SLF)

Start Date of the Measures to Relax the Terms and Conditions for the Securities Lending Facility
“The Bank of Japan has decided to implement the measures announced” on April 25, 2019

April 25, 2019
(1) BOJ clarified its intention to maintain low rates at least through spring 2020
(2) BOJ expanded eligible collateral for the Bank’s provision of credit
(3) BOJ relaxed the terms and conditions for the Securities Lending Facility (SLF)

Statement on Monetary Policy
(1) “The Bank intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, at least through around spring 2020, taking into account uncertainties regarding economic activity and prices including developments in overseas economies and the effects of the scheduled consumption tax hike.” (2) “The Bank will implement the measures shown in the Attachment [included at the bottom of the release], including the expansion of eligible collateral for the Bank’s provision of credit.”

July 31, 2018
The BOJ made a couple of policy clarifications and adjustments, leaving some flexibility around JGB yields

Strengthening the Framework for Continuous Powerful Monetary Easing
The Bank decided to make the following clarifications and adjustments (with our emphasis): (1) “The Bank will purchase Japanese government bonds (JGBs) so that 10-year JGB yields will remain at around zero percent. While doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices.” (2) “The Bank, under the condition that yield curve control can be conducted appropriately, will reduce the size of the Policy-Rate Balance in financial institutions’ current account balances at the Bank — to which a negative interest rate is applied — from the current level of about 10 trillion yen on average.” (3) “The Bank will revise the purchase amount of each ETF and increase that of ETFs which track the Tokyo Stock Price Index (TOPIX).” With regard to JGB yields, the bank footnoted: “In case of a rapid increase in the yields, the Bank will purchase JGBs promptly and appropriately.”

June 15, 2018
No significant changes

January 23, 2018-
April 27, 2018

No significant changes

January 31, 2017-
December 21, 2017

No significant changes

December 20, 2016
No significant changes

November 01, 2016
Set guidelines for YCC management; Long-term yields target of 0% with purchases of JGBs at “more or less” current pace

Statement on Monetary Policy
“The Bank will apply a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank … The Bank will purchase Japanese government bonds (JGBs) so that 10-year JGB yields will remain at around zero percent. With regard to the amount of JGBs to be purchased, the Bank will conduct purchases at more or less the current pace — an annual pace of increase in the amount outstanding of its JGB holdings of about 80 trillion yen — aiming to achieve the target level of the long-term interest rate specified by the guideline.”

September 21, 2016
Introduced QQE with YCC and “inflation-overshooting commitment”

New Framework for Streghtening Monetary Easing: “Quantative and Qualitative Monetary Easing with Yield Curve Control”
1. “At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan conducted a comprehensive assessment of the developments in economic activity and prices.”
2. Based on these … the Bank decided to introduce “QQE with Yield Curve Control” by strengthening the two previous policy frameworks … The new policy framework consists of two major components: the first is “yield curve control” in which the Bank will control short-term and long-term interest rates; and the second is an “inflation-overshooting commitment.”
(Also see: Comprehensive Assessment)

July 29, 2016
Doubled the annual pace of ETF purchases to about 6 trillion yen from 3.3 trillion yen

Enhancement of Monetary Easing
1. “Against the backdrop of the United Kingdom’s vote to leave the European Union and the slowdown in emerging economies, uncertainties surrounding overseas economies have increased and volatile developments have continued in the global financial markets.” BOJ decided:
(1) “The Bank will purchase ETFs so that their amount outstanding will increase at an annual pace of about 6 trillion yen (almost double the previous pace of about 3.3 trillion yen).”
(2) “Measures to ensure smooth funding in foreign currencies by Japanese firms and financial institutions” to include: “Increasing the size of the Bank’s lending program to support growth in U.S. dollars” and; “Establishing a new facility for lending securities to be pledged as collateral for the U.S. Dollar Funds-Supplying Operations.”
2. “With regard to the guideline for money market operations, the guidelines for asset purchases except for ETF purchases, and the policy rate, the Bank decided to leave these unchanged.”
3. “The Government is undertaking fiscal and structural policy initiatives, including a large-scale ‘stimulus package,’ which is currently being compiled.”
4. “The Bank will continue with ‘QQE with a Negative Interest Rate,’ aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner.”
5. “[T]he Bank will conduct a comprehensive assessment of the developments in economic activity and prices under ‘QQE’ and ‘QQE with a Negative Interest Rate’ as well as these policy effects at the next MPM.”

June 16, 2016
No significant changes

April 28, 2016
No significant changes

March 15, 2016
Increased purchases of ETFs from April to an annual pace of 3.3 trillion yen from 3 trillion yen

Statement on Monetary Policy
(1) Quantity: “The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 80 trillion yen.”
(2) Quality: (a) “The Bank will purchase Japanese government bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 80 trillion yen.” (b) “The Bank will purchase exchange-traded funds (ETFs) so that their amount outstanding will increase at an annual pace of about 3 trillion yen until the end of March 2016 and, from April, at an annual pace of about 3.3 trillion yen. It will also purchase Japan real estate investment trusts (J-REITs) so that their amount outstanding will increase at an annual pace of about 90 billion yen.” (c) “As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen, respectively.”

January 29, 2016
QQE with a Negative Interest Rate Explained

(Reference) Key Points of Today’s Policy Decisions (on April 28, 2016, Question 6 of Q&A is amended)
* “The Introduction of “Quantitative and Qualitative Monetary Easing (QQE) with a Negative Interest Rate”
– “The Bank will apply a negative interest rate of minus 0.1 percent to current accounts that financial institutions hold at the Bank. It will cut the interest rate further into negative territory if judged as necessary.”
– “The Bank will introduce a multiple-tier system which some central banks in Europe (e.g. the Swiss National Bank) have put in place. Specifically, it will adopt a three-tier system in which the outstanding balance of each financial institution’s current account at the Bank will be divided into three tiers, to each of which a positive interest rate, a zero interest rate, or a negative interest rate will be applied, respectively.”
* “‘QQE with a Negative Interest Rate’ is designed to enable the Bank to pursue additional monetary easing in terms of three dimensions, combining a negative interest rate with quantity and quality.”
– “The Bank will lower the short end of the yield curve and will exert further downward pressure on interest rates across the entire yield curve through a combination of a negative interest rate and large-scale purchases of JGBs.”
– “The Bank will achieve the price stability target of 2 percent at the earliest possible time by making full use of possible measures in terms of the three dimensions.”

January 29, 2016
QQE with a Negative Interest Rate Introduced; Quantity and Quality dimensions unchanged from prior MPM

Introduction of “Quantitative and Qualitative Monetary Easing with a Negative Interest Rate”
(1) Interest rate: “The Bank will apply a negative interest rate of minus 0.1 percent to current accounts that financial institutions hold at the Bank. It will cut the interest rate further into negative territory if judged as necessary. Specifically, the Bank will adopt a three-tier system in which the outstanding balance of each financial institution’s current account at the Bank will be divided into three tiers, to each of which a positive interest rate, a zero interest rate, or a negative interest rate will be applied, respectively.”
(2) Quantity: “The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 80 trillion yen.”
(3) Quality: (a) “The Bank will purchase Japanese government bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 80 trillion yen.” (b) “The Bank will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at annual paces of about 3 trillion yen and about 90 billion yen, respectively.” (c) “As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen, respectively.”
* “The Bank will continue with “QQE with a Negative Interest Rate,” aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine risks to economic activity and prices, and take additional easing measures in terms of three dimensions — quantity, quality, and interest rate — if it is judged necessary for achieving the price stability target.”