BoJ’s surprise makes more difficult to assess what monetary policy will be like under new chief – Commerzbank

The Yen made a massive jump as the Bank of Japan (BoJ) is moving after all. Economists at Commerzbank believe that now it will more difficult to assess what monetary policy will be like under the new BoJ chief.

A first admission to the upward pressure on yields

“BoJ extended the target for the 10-year yield from -0.25 to +0.25% to -0.50 to +0.50%. However, it immediately limits this step again.”

“I am still a bit split on how to assess today's action. It makes sense to allow a wider target range of yields, which are pushing higher, when yields are rising globally. But to simultaneously increase buying volume to better defend the new target again dilutes this decision.”

“Perhaps this is a first admission to the upward pressure on yields and at the same time paves the way for Haruhiko Kuroda's successor, who will take office in the spring. At least we now know that the BoJ can also move. This will probably make it all the more difficult to assess what monetary policy will be like under the new BoJ chief.”