The BOJ stuck with its policy rate of 0.5% at the end of a two-day gathering in Tokyo on Friday, according to its statement. The outcome on rates was expected by all 50 economists surveyed by Bloomberg. The board’s vote on rates was 7 to 2, the first time Governor Kazuo Ueda faced two dissenters against holding rates.
The central bank said that it will begin selling its ETF and J-REITs holdings at a scale generally equivalent to the sale of stocks bought from banks in the 2000s. It will begin disposing the assets once necessary operational preparations are completed, at a pace of about ¥620 billion by market value per year.
The yen had been strengthening against the dollar shortly before the statement was released, and continued to gain afterwards. Yields on 10-year government debt ticked up.
This is the first time the BOJ has mentioned a plan for offloading its ETF holdings, worth around ¥37 trillion ($251 billion) by book value, and more than double by market value. The central bank became the biggest single holder of Japanese stocks around 2020 during its massive monetary easing program, which ended last year.
In July, the central bank finished selling off all the stocks it bought from beleaguered banks during the financial crisis in the 2000s. Ueda has said that the BOJ can use the experience as a reference to consider what to do with the ETFs. Deputy Governor Ryozo Himino also said something similar in a speech earlier this month.
In a report in July, Goldman Sachs economists noted that it’s reasonable to expect the bank to start gradually selling ETFs in fiscal 2026 to minimise its potential losses and the impact on the stock market.
The lack of rate action on Friday was widely expected after Prime Minister Shigeru Ishiba’s resignation declaration kicked off a race for his successor, roughly a year after the last leadership election.
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