Bank of Japan exited negative interest rate policy (NIRP), and scrapped its YCC policy. All new changes will be effective from 21 March 2024.
The BOJ hiked its policy rate for the first time in 17 years, and switched its benchmark rate from the rate paid on excess reserves to the overnight unsecured call rate, which will be guided to within 0% to 0.1%. This will be achieved by raising the excess reserves’ rate from -0.1% to +0.1%.
The yield curve control policy (YCC) is also ceased although the BOJ will continue its JGB purchases to keep bond yields stable. The central bank will also discontinue the buying of ETFs and J-REITS, while gradually phase out the purchases of commercial papers and corporate bonds in one year.
The BOJ expects the Japanese economy to continue its moderate recovery, and sees the underlying CPI inflation to move gradually towards its price stability target amid rising inflation expectations and stronger wage growth.