The Bank of Japan plans to scrap guidelines that allow banks to buy exchange-traded funds (ETFs) at an annual pace of 6 trillion yen to allow greater flexibility in buying such funds, Japanese media reported, citing sources.
The BOJ plans to revise the guidelines so that it can stop buying ETFs when the stock market is high and buy them when prices plunge. The central bank will announce the results of its policy review on March 19.
Indeed, Japanese Inflation is still far from the central bank’s target of 2%, and the central bank has made it clear that work on assessing the long-term sustainability of the stimulus framework includes asset purchase measures such as ETFs.
Analysts point out that although the abandonment of the 6 trillion yen annual ETF purchase target will give the central bank greater flexibility, but may also send a signal to reduce easing, a factor that may make the central bank hesitant to advance the action.
According to a survey conducted this month by a foreign news agency, economists almost all expect the central bank to hint at greater flexibility in ETF purchases, but only 28% of respondents expect the central bank to abandon its 6 trillion yen purchase target.
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