What it means
The Bank of Japan is the Japanese central bank. From 2013 onward, the BoJ adopted aggressive monetary easing under Governor Kuroda (then continued under Ueda from 2023): quantitative easing (QE), yield curve control (YCC, capping the 10-year JGB yield from 2016), and negative interest rate policy (NIRP, deposit rate at -0.1% from 2016). In March 2024, the BoJ ended NIRP, YCC, and ETF purchases — the first rate hike in 17 years. Subsequent hikes brought the policy rate to 0.25% by mid-2024, with further hikes expected.
Why it matters
Japan is the world's largest creditor nation, holding $1.2T in foreign reserves and even more in private foreign assets. BoJ policy shifts move global capital flows. The 2024 BoJ tightening contributed directly to the August 2024 yen-carry-unwind that cascaded into global risk assets. Japan-Fed yield differential is the primary driver of USD/JPY — the most-traded carry pair globally.
How to use it
Track BoJ meetings (8 per year, statements at unpredictable times). Watch the policy rate, 10-year JGB yield (post-YCC), and BoJ balance-sheet trajectory. USD/JPY positioning often anticipates BoJ moves by months. MoF intervention in USD/JPY (separate from BoJ) is the parallel policy lever.
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