TOKYO (Reuters) – The Financial institution of Japan ought to restrain its purchases of exchange-traded funds (ETF) when markets are calm to stop its holdings from growing as a lot as doable, board member Hitoshi Suzuki stated on Wednesday.
In a evaluation of its coverage instruments in March, the BOJ ditched a numerical goal on the tempo of its purchases of ETFs and real-estate belief funds (REIT) as a part of efforts to make its large stimulus programme extra sustainable.
“It’s vital to be conscious of the BOJ’s monetary well being in shopping for ETFs and REITs,” Suzuki stated in a speech. “Because the BOJ’s holdings enhance, the impression on its monetary well being turns into larger,” he added.
A former industrial banker, Suzuki additionally stated the BOJ should guarantee Japan’s banking sector is sound with the intention to make its financial easing sustainable.
Below a coverage dubbed yield curve management, the BOJ guides short-term rates of interest at -0.1% and pledges to cap long-term charges round zero. It additionally buys authorities bonds and dangerous belongings reminiscent of ETFs to revive the financial system.
Reporting by Leika Kihara; Modifying by Chang-Ran Kim & Shri Navaratnam