"We have ended our extraordinary monetary easing scheme"/Other important stuff

"We have ended our extraordinary monetary easing scheme" said BoJ Governor Kazuo Ueda (good riddance) though also acknowledged "But we still hold massive a amount of JGBs purchased during the extraordinary monetary easing. The same goes for our ETF holdings. These will remain remnants of the extraordinary monetary easing scheme." It certainly will and their benchmark rate is still now just a range from zero to +.10% versus inflation well above that but that's certainly better than negative. Ueda also told markets that "We will also increase bond buying nimbly if there is a sharp rise in long term rates." So, today was a big move, though widely telegraphed and because we don't expect short term rates to rise anytime soon again, it's been a sell on the news for the yen and JGBs are rallying with yields down. 

That last point said, short term rates though could still rise again this year. Ueda said "If the likelihood heightens further and trend inflation accelerates a bit more, that will lead to a further increase in short term rates." And he acknowledged how deeply negative real rates still are. From here, Ueda is going to have to balance, as he has up to this point, the huge financing needs of the Japanese government that needs a low cost of financing with policy that is still deeply easy. 

I'll say something that I've said before, negative interest rate policy seen via the BoJ and mostly from the ECB and other European central banks, was the dumbest idea in the history of economics. And, the BoJ's multi decade strategy of flattening the yield curve to about zero is why the TOPIX bank stock index is still down 79% from its 1989 peak as they killed off the profitability of the banks, the lifeline of lending to business.

BoJ Balance Sheet as % of GDP as of 12/31/23