BOJ's Masai is concerned over market shocks due to global uncertainty
The election of Donald Trump as American President, Brexit as well as the weak state of the European Union's financial sector have been mentioned by Bank of Japan board member Takako Masai as probable causes of future global economic weakness and also wild financial market swings.
Masai told in a speech for business leaders in Saitama that there’s uncertainty as for the economic policies, which Trump will pursue. Additionally, Masai expressed concern that uncertainty regarding overseas economies could affect sentiment in Japan.
It turns to be a very delicate time for the BOJ. It’s because Trump's victory has generated a global sell-off in bonds, which is testing the BOJ's ability to contain revenues in yields under its new policy framework.
In September, Japan’s major bank last switched its policy objective to interest rates from expanding the monetary base.
Its main policy tools turn to be the negative 0.1% interest rate it charges on a rather small portion of commercial bank reserves as well as debt purchases to keep 10-year yields around zero.