Bank of Japan holds at 1.25% and speeds up its ETF exit
The rate stays unchanged, but annual ETF sales will rise to about 860 billion yen on a book-value basis from January.
The Bank of Japan held its short-term policy rate at around 1.25% on Friday and approved a faster pace of selling the exchange-traded funds on its balance sheet. The rate decision passed 8-1; the ETF decision was unanimous, according to the central bank's statement.
The new ETF sales pace is about 860 billion yen a year on a book-value basis, compared with about 330 billion yen previously. It takes effect in January 2027. These are carrying-value figures, not the cash value of the funds at today's market prices.
The BOJ says the revised pace is equivalent to about 0.1% of market trading value. It can temporarily adjust or suspend sales in response to financial-market conditions while staying within the annual pace. Sales of Japanese real-estate investment trusts remain at about 5 billion yen a year on a book-value basis.
Board member Hajime Takata preferred a rate increase to around 1.5%, but his proposal was defeated. The statement says he viewed underlying inflation as having reached the price-stability target and favored moving interest rates toward neutral more quickly.
Nikkei Asia and Reuters separately reported that the BOJ now sees underlying inflation as broadly consistent with its 2% target. That makes the distinction between today's hold and the path ahead important: leaving the rate alone at one meeting does not promise that the next meeting will bring the same decision.
The official statement is the source for the rate, vote, sales amounts and start date. No date for a future rate increase was announced in that statement, so an expected December move should not be read as a commitment.
