BOJ Decides to Sell ETFs, J-REITs

Tokyo, Sept. 19 (Jiji Press)–The Bank of Japan on Friday decided to sell to the market exchange-traded funds (ETFs) and Japanese real estate investment trusts (J-REITs) that the central bank had purchased as part of its large-scale monetary easing program. The BOJ made the decision by a unanimous vote at a two-day meeting of its Policy Board that ended the same day, taking another step toward normalizing monetary policy. Also at the meeting, the Japanese central bank decided to maintain the policy of guiding the unsecured overnight call rate, Japan’s benchmark short-term policy rate, to around 0.5 pct. The decision was made by a vote of seven to two. Policy Board members Hajime Takata and Naoki Tamura voted against maintaining the policy rate, arguing for a rate hike. After raising the policy interest rate from 0.25 pct to 0.5 pct in January, the BOJ has now kept it unchanged for five consecutive policy-setting meetings. The Japanese central bank is believed to have judged that it needs to assess the impact of U.S. President Donald Trump’s high tariffs policy on the domestic and global economies and monitor domestic political developments before determining the timing for raising the policy rate. The BOJ will begin selling ETFs at an annual pace of around 330 billion yen based on book value and J-REITs at an annual pace of some 5 billion yen once the necessary preparations are complete. The proportion of these sales will be kept at around 0.05 pct of total market trading volumes for both ETFs and J-REITs. In a statement released after the latest meeting, the BOJ said that it remains “highly uncertain” how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them. The BOJ maintained the view that underlying consumer price index inflation is “likely to be at a level that is generally consistent with” the central bank’s price stability target of 2 pct in the second half of its current projection period through fiscal 2027. END [Copyright The Jiji Press, Ltd.]