The Bank of Japan (BOJ) is beginning a new chapter in its monetary policy. After years of a massive easing program, the central bank announced it will start selling its extensive holdings of exchange-traded funds (ETFs).
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- Rates Remain Unchanged: The BOJ is keeping its benchmark interest rate at 0.5%, a decision that was widely anticipated by economists. This move reflects the bank’s cautious approach amid ongoing economic and political uncertainties. The vote was 7 to 2, the first time Governor Kazuo Ueda has faced two dissenting votes on holding rates steady.
- Offloading ETFs: This is the first time the BOJ has outlined a plan to sell its ETFs, which it accumulated during a period of massive monetary easing. The central bank holds an estimated ¥37 trillion ($251 billion) in these funds by book value. By market value, this figure is more than double.
- The Plan: The BOJ plans to offload these assets at a gradual pace, modeling the sales on a similar program from the 2000s when it sold stocks bought from banks. The central bank will sell roughly ¥620 billion of ETFs per year by market value, a move designed to minimize disruption to the stock market.
- Market Reaction: Following the announcement, the yen strengthened against the dollar and yields on 10-year government debt saw a slight increase.
The BOJ’s decision to begin selling its ETF holdings signals a major shift away from the unconventional policies of the past and toward a more normalized monetary stance. The bank’s past experience with selling off stocks from the 2000s will serve as a reference point for this new, long-term process.
