| | | | | It’s not that hard to make sense of Central Banks’ decisions.
Their instruction manual is relatively straightforward. Their motivations, usually transparent. And even when they surprise you, it’s still not hard to see what they were thinking.
That was until Tuesday.
In a move that left the financial world dumbstruck, the Bank of Japan announced it would move the yield curve control (YCC) target on 10-year Japanese Government Bonds (JGBs) from 25 basis points to 50 basis points.
So confusing was the move that you would be correct in calling it either a “monumental shift in policy” or a “nothingburger.”
It was monumental in that after pursuing inflation relentlessly for over 30 years and failing, current global conditions finally favor their policies. With inflation in Japan — running at about 3.5% per year, finally creeping into the economy, one is left wondering why shift now.
And it was a nothingburger because telling the world you would be willing to pay less for their bonds (and that’s all the statement amounted to) doesn’t really matter when you already own them all. There’s are very few JGBs left to sell the Bank of Japan.
So, superficially, it was a toothless statement.
But look underneath that superficial statement and you’ll see the Bank of Japan sowing seeds of chaos…
| | | | | |
|
|
0 Response to "The BOJs “Nothing Burger” Was Really Something"
Post a Comment