TOKYO, Feb. 11, 2022—Japan’s central bank Feb. 10 affirmed its zero interest rate policy will continue by announcing ‘unlimited’ purchases of long-maturity Japanese government bonds at 0.25%.
The Bank of Japan said the liquidity adding operation to the money market is aimed at keeping 10-year JGB interest rate ‘around zero percent.’ The open market purchasing operation is the first time since July 2018. Feb. 10 afternoon 10-year JGB secondary market yields were at 0.23$, the highest since Jan. 22, 2016, Reuters said.
BOJ Gov. Haruhiko Kuroda, a former Ministry of Finance bureaucrat, is in tune with the ministry to keep rates as close to zero as possible to keep the refinancing cost of maturing JGBs. The aggregate JGB issuance far exceeds 1,100 trillion yen (about $10 trillion).
The BOJ operation is likely to nudge the yen lower against the U.S. dollar and other currencies as other countries are poised to tighten monetary policy to fight inflation. The January US CPI jumped 7.5% year-on-year, the steepest since February 1982, and 0.6 percent from December. December year-on-year rise was 7.3 percent.
The dollar-yen rate was about 116.10 yen Feb. 11 Tokyo time. Japanese financial markets were closed for a legal holiday.
The U.S. government and the Federal Reserver, which had cast a curious eye on the modern monetary policy, are now in the throes of reorientation back to the authentic monetary and fiscal policies as prices began surging from last year. Japanese financial and monetary policymakers, essentially with socialist inclination, have never detailed from the authentic theories but finding themselves without options to continue accommodative policies in light of the huge government debt.
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