Rather than loosen policy outright on Wednesday, the Bank of Japan (BoJ) made changes to its existing policy framework, some of which are designed to lessen side effects on the financial sector. It is therefore not surprising that the yen has strengthened. Nonetheless, we forecast that monetary policy will be eased again before long to the detriment of the yen and the benefit of Japanese equities. Meanwhile, we anticipate that the 10-year JGB yield will hover near its new “controlled” target of around 0%.
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