TOKYO (Reuters) – The Bank of Japan (BOJ) ended eight years of negative interest rates and other pieces of unorthodox policy on Tuesday, making a historic shift away from decades of massive monetary stimulus.
Here is a timeline of key moments in the BOJ’s battle with decades-long deflation and the gradual unwinding of its radical monetary stimulus.
1999
February – BOJ introduces zero interest rate policy.
2000
August – BOJ raises short-term target to 0.25%, a move criticised as premature as Japan suffers a domestic banking crisis.
2001
March – BOJ adopts quantitative easing (QE), shifts policy target from interest rates to pace of money printing.
2006
March – BOJ exits QE, shifts back to interest rate target.
July – BOJ raises short-term rates to 0.25%.
2007
February – BOJ raises short-term rates to 0.5% from 0.25%.
2008
October – BOJ cuts short-term rates to 0.3% from 0.5% to fend off economic shocks from the collapse of Lehman Brothers.
December – BOJ cuts short-term rates to 0.1% from 0.3%.
2010
October – BOJ cuts short-term rates to 0-0.1%, starts buying risky assets like exchange-traded funds (ETF) as part of a newly introduced asset-buying programme.
2013
January – BOJ adopts 2% inflation target, signs agreement with government pledging to meet the target “at the earliest date possible.”
April – BOJ Governor Haruhiko Kuroda adopts new asset-buying scheme dubbed “quantitative and qualitative easing” (QQE), commits to achieving 2% inflation in roughly two years.
2014
October – BOJ expands QQE, increases purchases of government bonds, ETFs.
2016
January – BOJ adds negative interest rate policy, and applies a 0.1% charge to a small pool of excess reserves financial institutions park with the central bank.
July – BOJ eases monetary policy, ramps up ETF buying.
September – BOJ adopts yield curve control (YCC), shifts policy target to interest rates from pace of money printing and introduces 10-year bond yield target of around 0%.
2018
April – Kuroda re-appointed for a second term as governor.
July – BOJ clarifies it will allow the 10-year yield to move 10 basis points either side of its 0% target.
2021
March – BOJ conducts “comprehensive assessment” of YCC to address its side-effects. It decides to taper ETF buying, widen the 10-year yield band to 25 basis points up and down the 0% target and adopts new market operation that allows it to buy an unlimited amount of 10-year bonds at a fixed rate.
2022
May – BOJ begins to offer buying unlimited amount of 10-year bonds at a fixed rate on a daily basis, as long-term interest rates approached its 0.25% cap more frequently than before
December – BOJ widens 10-year yield band to 50 basis points up and down the 0% target, a move aimed at easing some of the cost of prolonged stimulus.
2023
April – Kazuo Ueda becomes BOJ governor, removes guidance pledging to keep interest rates at “current levels or lower” and announces plans to conduct a comprehensive review of past monetary easing measures.
July – BOJ tweaks YCC by raising yield cap to 1% from 0.5%.
October – BOJ tweaks YCC by re-defining 1% cap as a loose reference, a move seen as essentially dismantling yield control.
2024
March – BOJ dismantles massive stimulus programme by ending negative rate policy, YCC and risky asset purchases. Overnight call rate set as BOJ’s new policy target.
(Reporting by Leika Kihara. Editing by Sam Holmes.)
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