Bank of Japan Rate Decision

Unusually among major central banks, the Bank of Japan does not announce its decision at a set minute. The nine-member Policy Board meets over two days, and the statement is released when deliberations end, most often around midday in Tokyo but sometimes later. Traders therefore watch headline screens through the Asian morning, and the yen can move sharply the moment the release appears. The Governor holds a press conference in the afternoon.

For decades Japanese policy was defined by the fight against deflation. The BoJ held rates at or below zero for long stretches, bought government bonds and exchange-traded funds on a vast scale and, for several years, capped ten-year bond yields under a policy called yield-curve control. Its policy rate today is the target for the uncollateralised overnight call rate. Because Japanese rates spent so long near zero, even small changes, or a hint of one, have tended to carry outsized weight for USD/JPY and the carry trades funded in yen.

Adjustments have sometimes come without clear signalling, so the gap between market pricing and the outcome can be wide. The quarterly Outlook for Economic Activity and Prices, released at four meetings, contains the board's forecasts and is often the venue for policy shifts. The bank's bond purchases and plans for reducing them are also decided here and can move long-dated yields.

Japan's finance ministry, not the central bank, decides on currency intervention, but periods of sharp yen weakness have made the two institutions' communications read closely together. The Nikkei 225 tends to move inversely to the yen.