COTW: End of an Era

March 25, 2024COTW: End of an Era

  • On Tuesday, the Bank of Japan announced a significant (and highly anticipated) policy move last week by ending its negative interest rate policy and making its first rate hike in 17 years. This marked a historic shift away from an aggressive monetary easing program that had been in place for years to combat economic challenges.
  • The Bank of Japan raised its short-term rate to “around zero to 0.1%” from -0.1% and abandoned its yield curve control policy, which aimed to keep the yield on 10-year Japanese government bonds around 0%.
  • Additionally, the bank decided to stop purchases of exchange-traded funds and Japanese real estate investment trusts as part of this policy shift. Bank of Japan governor Ueda said that the Bank’s ETF holdings were “remnants of the extraordinary monetary easing regime.” The Japanese Yen sharply dropped following the news, slipping to ¥151.3 to the dollar, while Japanese government bond yields also declined.


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