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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/sep/21/bank-of-japan-stimulus-programme-federal-reserve-business-live
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| Bank of Japan shakes up stimulus programme, sending markets rallying – business live | |
| (35 minutes later) | |
| 8.26am BST | |
| 08:26 | |
| Markets rally after BoJ reboots stimulus | |
| European stock markets are rallying in early trading, led by the banking sector. | |
| The FTSE 100 has jumped by 35 points, or 0.5%, to 6867, as investors give an early thumbs-up to the BoJ’s announcement. | |
| Barclays (+4%) is the top riser in London, with Lloyds Banking Group (+2.5%) and Standard Chartered (2.2%).close behind | |
| Bank pop! #BOJ helps guide longer-end yields higher...banks rally in Japan & here in Europe pic.twitter.com/5VE3gPiQsV | |
| Germany’s DAX index has jumped by 1%, while the French CAC is up by 1.2%. | |
| That follows the strong trading in Asia, where Japan’s market jumped by 2%. | |
| Traders are welcoming the new that central banks can still find ways to stimulate their economies (even though we don’t know if it will work. | |
| Mike van Dulken & Henry Croft at Accendo Markets explain: | |
| The positive start comes after a markets welcomed the Bank of Japan (BoJ) leaving its already negative interest rates unchanged overnight and tweaking its existing stimulus programme. | |
| This buys governor Kuroda some time and leaves the door open for more rate cuts/policy easing which has seen the Yen weaken to the benefit of Nikkei exporters and helped financials rally. | |
| As expected, the BoJ has offered an interesting policy update for markets to digest and is a good effort at dispelling uncertainty about global central bank’s losing potency and running out of ammo. And while the Fed is unlikely to make any policy change tonight, its message and sure-fire subtle hints certainly could, especially in light of fresh Yen weakness sending the US dollar basket to September highs. | |
| 8.21am BST | |
| 08:21 | |
| Japan launches QQEYCC | |
| Today’s measures are being dubbed “QQEYCC”, or “quantitative and qualitative monetary easing with yield curve control”. | |
| Yield curve control? Well, that’s the new commitment to keep the yield, or interest rates, on Japanese 10-year bonds at zero. | |
| Peter Wells of FastFT has done a nice explanation: | |
| If there’s one thing we can be sure of, it’s that the Bank of Japan has added to its alphabet ramen of policy terms. | |
| Markets will now be served a piping hot bowl of “quantitative and qualitative monetary easing with yield curve control”. | |
| Yield curve control… isn’t that part of the auto-pilot function in a Tesla? | |
| It may well be, but in the context of the Bank of Japan it means policymakers are making a renewed effort to keep borrowing costs low in an effort to spur growth. | |
| JGBs weaker after BoJ caps 10-year yield https://t.co/GHddR9QQmY | |
| 8.16am BST | |
| 08:16 | |
| BoJ reboots stimulus: What the experts say | |
| There’s broad agreement that the Bank of Japan has taken monetary policy into new territory today, despite leaving interest rates on hold. | |
| But while some financial experts welcome the changes to the BoJ’s stimulus package, others fear that it won’t work. | |
| Takashi Miura, banking analyst at Credit Suisse, says the new measure are a “positive surprise”. | |
| It’s positive for banks. The BOJ did not deepen the negative rate, so there’s no impact on banks’ lending rates. | |
| Furthermore, I think the BOJ’s new target to keep 10-year yields hovering around zero percent means the central bank effectively won’t deepen the negative rate. That is a positive for banks. | |
| Divya Devesh of Standard Chartered says the key news is the BoJ’s new commitment to overshoot the 2percent inflation target: | |
| That’s committing to continue easing for longer than previously expected. Also hinting that the balance sheet will remain large for a long time. We think that’s dollar/yen positive. Also, markets are a bit relieved given no further cuts to interest rates.” | |
| However.... Nick Kounis of ABN Amro isn’t convinced that today’s measures go far enough. | |
| #BoJ first central bank to essentially raise its inflation target but accompanying stimulus does not make it credible. deflation more likely | |
| This is from Ilya Spivak of DailyFX.com | |
| Committing to "overshoot" 2% inflation rings hollow if you can't get there in the first place. #BOJ | |
| Seems to me that hitting one's head against the wall harder than before won't make it any more likely to crack #BOJ | |
| Duncan Weldon of the Resolution Group argues that Tokyo’s government needs to boost spending too: | |
| 1. Feels like a decent effort from BOJ. The inflation overshoot stuff (or rather the "we'll keep easing") commitment important. | |
| 2. That said, further improvement requires fiscal action. Monetary policy/debt management all getting very blurry with yield curve targets. | |
| 8.01am BST | |
| 08:01 | |
| The Bank of Japan will be pleased to see that the yen is weakening. | |
| The Japanese currency has fallen by 1% against the US dollar, from ¥101 to ¥102. | |
| Lower is better, if you’re trying to get inflation higher #CurrencyWars | |
| #yen weaker 102.52 #BOJ shifts from pre-set target for expanding #money supply to controlling yields' shape #japan pic.twitter.com/RofGKCqKVq | |
| 7.54am BST | 7.54am BST |
| 07:54 | 07:54 |
| Japanese stocks surge after BoJ announcement | Japanese stocks surge after BoJ announcement |
| The Tokyo stock market has rallied strongly, as investors welcome the Bank of Japan’s new commitment to overshoot its inflation target. | The Tokyo stock market has rallied strongly, as investors welcome the Bank of Japan’s new commitment to overshoot its inflation target. |
| The Nikkei has jumped by almost 2%, or 315 points, while the wider Topix index gained 2.7%. | The Nikkei has jumped by almost 2%, or 315 points, while the wider Topix index gained 2.7%. |
| Bank shares are leading the rally; on relief that the BoJ didn’t slash interest rates deeper into negative territory. | Bank shares are leading the rally; on relief that the BoJ didn’t slash interest rates deeper into negative territory. |
| Nikkei jumps 1.9% to 16807.62 as Yen weakens after BoJ kept neg rate unch at -0.10% BUT adopts QQE w/ yield curve control to prop up banks pic.twitter.com/CIVwvniTxj | Nikkei jumps 1.9% to 16807.62 as Yen weakens after BoJ kept neg rate unch at -0.10% BUT adopts QQE w/ yield curve control to prop up banks pic.twitter.com/CIVwvniTxj |
| Updated | |
| at 7.57am BST | |
| 7.41am BST | 7.41am BST |
| 07:41 | 07:41 |
| Introduction: Bank of Japan shakes up stimulus programme | Introduction: Bank of Japan shakes up stimulus programme |
| Good morning. | Good morning. |
| Central bankers have fired a lot of ammunition into the financial system, in the eight years since the crisis blew up. And the Bank of Japan has just shown that they’re not out of firepower yet. | Central bankers have fired a lot of ammunition into the financial system, in the eight years since the crisis blew up. And the Bank of Japan has just shown that they’re not out of firepower yet. |
| The BoJ has rebooted its stimulus programme overnight, announcing a cocktail of new targets and measures. It’s a new bid to drive inflation and growth, and weaken the yen. | The BoJ has rebooted its stimulus programme overnight, announcing a cocktail of new targets and measures. It’s a new bid to drive inflation and growth, and weaken the yen. |
| But it also resisted slashing interest rates; instead, it has adjusted its bond-buying efforts, and reasserted its commitment to getting inflation back to 2%. | But it also resisted slashing interest rates; instead, it has adjusted its bond-buying efforts, and reasserted its commitment to getting inflation back to 2%. |
| At its eagerly awaited policy meeting today, the BoJ: | At its eagerly awaited policy meeting today, the BoJ: |
| It all adds up to another commitment to do “whatever it takes” to drag Japan’s economy out of its ever-lengthening period of weak growth and soggy inflation. | It all adds up to another commitment to do “whatever it takes” to drag Japan’s economy out of its ever-lengthening period of weak growth and soggy inflation. |
| Brave new world: #BOJ "pledged to expand the monetary base until inflation is stable above 2% target" - basically committing to overshoot | Brave new world: #BOJ "pledged to expand the monetary base until inflation is stable above 2% target" - basically committing to overshoot |
| The Financial Times are calling it an “unprecedented new kind of monetary easing”. | The Financial Times are calling it an “unprecedented new kind of monetary easing”. |
| We should hear more from Japanese central bank chief Haruhiko Kuroda shortly. | We should hear more from Japanese central bank chief Haruhiko Kuroda shortly. |
| And it sets the tone for a big day in central banking. At 7pm BST, the US Federal Reserve will announce whether it has taken the plunge and raised interest rates for the first time this year. The markets are expecting the Fed to leave rates on hold, probably until December. But as the BoJ showed today, you never quite know where you are with central banks.... | And it sets the tone for a big day in central banking. At 7pm BST, the US Federal Reserve will announce whether it has taken the plunge and raised interest rates for the first time this year. The markets are expecting the Fed to leave rates on hold, probably until December. But as the BoJ showed today, you never quite know where you are with central banks.... |
| Updated | Updated |
| at 7.49am BST | at 7.49am BST |