The Bank of Japan ended the most aggressive monetary stimulus program in modern history this morning, scrapping the world’s last negative interest rate. But the dovish nature of the bank’s commentary hurt the yen, as the lack of clues on future moves and the bank’s indication that financial conditions will remain accommodative clearly showed its first hike in 17 years isn’t the beginning of all-out tightening cycle of the sort seen recently in the US and Europe. Nonetheless, John Authers says everyone should be grateful for the exit from negative rates.
Market Calm
The hike had been well-flagged beforehand, allowing it to be quickly absorbed by markets. Japanese bonds gained and the Topix closed at the highest since 1990, while the dollar strengthened and Treasuries were little changed. Elsewhere, the Australian dollar was set for the weakest level in about two weeks after the Reserve Bank of Australia held policy rates at a 12-year high.
Source Bloomberg
