A look at the day ahead in European and global markets from Wayne Cole.
has held the lineThe economic outlook was revised a little, with GDP forecasts nudged down and CPI inflation up a touch to 1.8%, but that was short of the 2% target that some had predicted.
One subtle change was to rules for providing fixed-rate funds to markets, with the BOJ saying the rate charged on loans out to 10 years would be set "to encourage the formation of a yield curve that is consistent with the guideline for market operations." It then offered to lend one trillion yen at a fixed rate for five years.
In a sense, the BOJ is the single source of liquidity as it really is the buyer of last resort right now. Perhaps the idea is to provide an escape route for investors to exit their long JGB positions at current prices, and avoid the deeper losses that would surely come when YCC is finally wound down.
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