Bank of Japan Policy Board Press Release July 31, 2018 – STAY THE COURSE
In its press release for the Bank of Japan Monetary Policy Meeting:
- Affirm the continuation of the powerful monetary easing to achieve the price stability target:
- introducing forward guidance for policy rates
- Maintain the current extremely low levels of short- and long-term interest rates for an extended period of time
- enhance the sustainability of “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control
- For short-term rate – apply a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.
- For long-term rate – purchase Japanese government bonds (JGBs) so that 10-year JGB yields will remain at around zero percent. The Bank will conduct JGB purchases in a flexible manner and at the rate of about 80 trillion yen. The yields may move upward and downward to some extent mainly depending on developments in economic activity and prices.
- For asset purchase – Depending on market conditions, the Bank will purchase about 6 trillion yen in exchange-traded funds (ETFs) and about 90 billion yen in Japan real estate investment trusts (J-REITs). As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen, respectively.
- economy is expanding moderately
- labor market conditions have continued to tighten
- prices have continued to show relatively weak developments, due to
- firms’ cautious wage- and price-setting stance, and
- households’ continuous cautiousness toward price rises
- the consumer price index (CPI) is likely to increase gradually toward 2 percent with the output gap remaining positive.
 As the central bank of Japan, the Bank of Japan carries out currency and monetary control to achieve price stability, thereby contributing to the sound development of the national economy, as stipulated in Articles 1 and 2 of the Bank of Japan Act. To this end, the Bank encourages short- and long- term interest rates to remain at target levels and purchases assets, mainly through open market operations.
 At the Monetary Policy Meeting held on September 20 and 21, 2016, the Bank decided to introduce a new policy framework of QQE with Yield Curve Control by strengthening the two previous policy frameworks of QQE and QQE with a Negative Interest Rate. This policy framework consists of two major components: the first is “yield curve control” in which the Bank controls short-term and long-term interest rates through market operations; and the second is an “inflation-overshooting commitment” in which the Bank commits itself to expanding the monetary base until the year-on-year rate of increase in the observed consumer price index exceeds the price stability target of 2 percent and stays above the target in a stable manner.