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BOJ widens yield band, pledges to buy risky assets only when necessary - Metro US

BOJ widens yield band, pledges to buy risky assets only when necessary

FILE PHOTO: A security guard walks past in front of the Bank of Japan headquarters in Tokyo

TOKYO (Reuters) – The Bank of Japan on Friday widened the band at which it allows long-term interest rates to move around its 0% target and pledged to buy risky assets only when necessary, instead of at a set annual pace.

In a review of its policy tools announced on Friday, the BOJ said it would allow long-term rates to move up and down by 0.25% around its target, instead of by 0.2%.

The BOJ also said it would buy exchange-traded funds (ETF) and real-estate trust funds (REIT) when necessary, while maintaining its 12-trillion-yen and 180-billion-yen ceilings for the purchases, respectively.

As widely expected, the BOJ kept monetary settings unchanged, including a pledge to guide short-term interest rates at -0.1% and 10-year bond yields around 0%.

The BOJ unveiled in December a plan to conduct the review in March to come up with ways to make its policy more “sustainable and effective” as the COVID-19 pandemic hurts the economy and prolongs the battle to achieve its elusive 2% inflation target.

(Reporting by Leika Kihara, Tetsushi Kajimoto, Kaori Kaneko and Daniel Leussink; Editing by Chang-Ran Kim)

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