The Bank of Japan on Wednesday decided to adopt a target for long-term interest rates in an overhaul of its massive stimulus programme.
The BOJ said it would continue to buy long-term government bonds at a pace so that the balance of its holdings increases by 80 trillion yen ($781 billion) per year.
“With a view to achieving the the price stability target of 2 percent at the earliest possible time, the Bank decided to introduce ‘QQE with yield curve control’,” the bank stated.
“With regard to to the amount of JGBs to be purchased, the bank will conduct purchases more or less in line with the current pace - an annual pace of increase in the amount of outstanding of its JGB holdings at about 80 trillion yen.”
The bank also announced an “inflation-overshooting commitment”, essentially a pledge to expand the nation’s monetary base until the annual increase in consumer price inflation (CPI) exceeds its price stability target of 2% “and stays above the target in a stable manner”. Details to follow soon.