BoJ rearranges furniture to prepare for prolonged hold

The Bank of Japan’s policy review today contained various nudges to policy levers but ultimately marked neither a tightening nor an easing of policy. Governor Kuroda was keen to emphasise in the press conference that widening the target band for 10-year yields would allow a “deepening” of negative rates and the introduction of higher interest rates on a slice of bank reserves would also make rate cuts easier to implement. In our view though, the policy tweaks suggest that the Bank is settling in for the long haul with rates as they are.