The Bank of Japan unexpectedly "turned", and the global market is having a chain reaction.
news, according to the official website of the Bank of Japan, on December 20, the Bank of Japan maintained the benchmark interest rate at a historical low of -0.1%, in line with market expectations. In addition, the Bank of Japan raised the target cap for the 10-year government bond yield from 0.25% to 0.5%. The Bank of Japan said the new yield curve control range is plus or minus 0.5%. But at the same time, it increased the scale of Japanese government bond purchases from January to March to 9 trillion yen per month.
This move was regarded by the market as a sign that the Bank of Japan had finally compromised on maintaining its quantitative easing policy.
Bloomberg economists said that as the world's last central bank to change its policy, the Bank of Japan's policy adjustment will produce "shock waves" in the global financial market.
On December 20, the Nikkei 225 Index opened in the afternoon and plummeted. The U.S. dollar plunged straight below the 134 mark against the yen, falling more than 2.5% during the day. The 10-year Japanese yield surged 21 basis points to 0.467%, the highest since 2015, and trading in Japanese government bond futures was suspended.
At the same time, US stock futures plunged during the session, Nasdaq futures fell more than 1%; the Indian stock market also fell 1%; gold futures rose close to the $1,800 mark. All 47 economists previously polled by
did not expect the central bank to change policy, although most of them had said the BOJ should do more to improve the functioning of the bond market. The unexpected decision is sending shockwaves through global financial markets.
For a long time this year, as Japan maintained its quantitative easing policy, the interest rate differential between the United States and Japan expanded, causing the yen to fall to a low in more than 20 years against the US dollar during the year. At that time, many analysts said that unless the Bank of Japan gave up or adjusted the YCC policy, the yen would not be able to gain momentum for a sustained rebound. However, subsequently, the yen rebounded slightly against the US dollar in November after market expectations that the Fed's interest rate hikes were about to slow down and the Japanese authorities repeatedly intervened in the foreign exchange market.
Jim O’Neill, a former economist at Goldman Sachs and chairman of investment company Northern Gritstone, said: “Given obvious reasons, including YCC’s size, history, low Japanese bond yields, and a weak yen, Japan’s sudden abandonment of YCC could cause serious damage in Japan and globally. If not handled properly, it could have worse global consequences than the previous British chaos.”
This article comes from Caitong News
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-