"BOJ To Discuss Yield Curve Control Tweak To Allow Rates Over 0.5%; The Proposed Change Would Keep Rate Ceiling, But Allow For Moderate Rises Beyond That Level" - Nikkei Asia
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The Bank of Japan (BOJ) is considering a more flexible approach to its yield curve control policy, allowing long-term interest rates to rise beyond its cap of 0.5%. The proposed change would maintain the rate ceiling but permit moderate increases above it. This comes as domestic inflation and rate hikes by other central banks, such as the Federal Reserve and the European Central Bank, raise concerns that yields could exceed the 0.5% threshold. The BOJ's policy of low interest rates has led to a widening rate differential with the U.S. and Europe, weakening the yen.
July 27, 2023 | 5:11 pm
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NEUTRAL IMPACT
The proposed changes in the BOJ's yield curve control policy could impact the iShares MSCI Japan ETF (EWJ). A more flexible policy could lead to a rise in long-term interest rates, potentially affecting the performance of Japanese stocks and, by extension, the EWJ.
The BOJ's yield curve control policy directly influences the interest rates in Japan, which in turn affects the performance of Japanese stocks. As the EWJ tracks the performance of publicly traded companies in the Japanese market, any changes in the policy could potentially impact the ETF. However, the exact impact would depend on various factors, including how the market reacts to the policy change.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 75