Market Wrap: 18 January 2023

Market Wrap: 18 January 2023

BOJ Holds Policy as It Pushes Back Against Market Speculation

  • Central bank sticks with yield curve control, weakening yen
  • Bonds climb as large-scale purchase program maintained


The Bank of Japan doubled down on its stimulus defense, pushing back against intense speculation of policy change, prompting a sharp slide in the yen and surge in bonds.  

Governor Haruhiko Kuroda’s board kept its main policy settings unchanged, leaving its negative interest rate at -0.1% and 10-year bond yields around 0%, according to its latest policy statement Wednesday. 

The bank said it would continue large-scale bond buying and increase it on a flexible basis if needed as it showed its intention to commit to yield curve control for now. It extended a loan offer to banks in a bid to encourage debt purchases from them.

The BOJ’s updated forecasts indicate officials still don’t see inflation staying above 2% in a sustainable manner over the coming years, offering a justification for further stimulus even after Kuroda steps down in April.


The yen tumbled more than 2% to 131.25 per dollar following the decision, while benchmark 10-year yields sank more than 10 basis points to below 0.4% when they reopened from the lunch break. Stocks jumped more than 2%.



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