Japanese Interest Rates Are Still Going Nowhere
In truth the Japanese currency will start the new year on a knife edge, its fate very much prey to developments beyond Japan.
Developments within Japan have been few, at least as far as we’re concerned here. The Yen still completely lacks domestic interest rate support. The Bank of Japan (BOJ) has the monetary taps wide open. Short rates are negative, yield curve control keeps ten-year Japanese Government Bond yields close to zero. The BOJ is also still buying huge amounts of bonds as part of its quantitative easing program. It did start to buy slightly fewer in 2018, but has strenuously denied that this amounts to monetary tightening.
--- Written by David Cottle, Analyst