BOJ's negative-rate policy helps Japan reduce debt issuance

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Perhaps you're already well aware that Haruhiko Kuroda is the head of the Bank of Japan (BOJ), and a Ben Bernanke of sorts when it comes to bringing an aggressive, avant garde stance to Japan's monetary policy, especially with respect to crisis response and quantitative easing.

The 10-year JGB futures price rose 0.10 point to 150.47 while the benchmark cash 10-year JGB yield dipped 0.5 basis point to 0.070 percent, slipping further from a six-month high of 0.090 percent set on Thursday.

The decision on maintaining its interest rate targets was made by an 8-1 vote with board member Goushi Kataoka dissenting on the view additional stimulus was needed to hit the target.

In a small sign of progress, it said inflation expectations remained more or less unchanged, an improvement from its previous assessment that they were weakening.

In a quarterly review of its forecasts, the BOJ maintained its 1.4 per cent economic growth estimate for the year beginning in April and the 0.7 per cent projection for the following year.

At a news conference following the BOJ's two-day policy-setting meeting that ended Tuesday, Kuroda underscored the need to "persistently continue the current powerful monetary easing", while denying that the BOJ has begun to consider an exit from the easing policy.

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The Dollar/Yen is trading higher after President Trump signed a bill to keep the US government funded until at least February 8, and after the Bank of Japan kept monetary policy unchanged, but made a few tweaks to its policy statement.

Some investors are sensing that a recent fall in the dollar to a three-year low may be coming to a close amid brewing concerns over the US stance on global trade policy.

Japan's economy expanded for the seventh straight quarter in July-September, its longest uninterrupted stretch of growth since 1994 and stock prices are at their highest in 26 years. He added that "what they fear most is a strong yen".

Japan got a taste of the challenge when a cut in the BOJ's bond buying pushed up global yields, and Kuroda's positive remarks on the economy drove the yen to a four-month high.

"We think the BoJ will have to make adjustments to its 10-year target as inflation rises, to avoid damaging consumer demand", said analysts at Pantheon Macroeconomics.

Expectations that the European Central Bank might withdraw its stimulus gained momentum earlier this month after the accounts of its last policy meeting showed it could shift its policy communication early this year. "It would be impossible to contain this", said Hiroaki Muto, an economist at Tokai Tokyo Research Center.

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