At the conclusion of its two-day meeting, the BOJ is expected to say it will make negative interest rates the centerpiece of a new policy framework.
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The meeting comes as the US Federal Reserve also finishes a meeting later in the day, but few expect the central bank to move on interest rates until later in the year at the earliest.
The Bank of Japan (BoJ) on Wednesday kept its policy balance rate unchanged at minus 0.10 per cent, but said it would introduce quantitative and qualitative monetary easing (QQE), with a newly-introduced tool to control the yield curve.
“The greatest risk for the BOJ is a failure to reach a consensus decision that will meet the raised inflationary expectations of the market and as a result we are short dollar/yen going into the meeting”, said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong.
The yield on the 10-year Japanese government bond was recently up 4 basis points at minus 0.03%.
Japan’s exports fell 9.6 percent in August from a year earlier, posting an 11th straight month of decline, Ministry of Finance data showed on Wednesday, underscoring sluggish external demand, Reuters reported.
Ahead of the decision, MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.15 per cent, perched at its highest levels since Sept 12.
The benchmark 10-year JGB yield rose to as high as plus 0.005 percent, rising to a positive level for the first time since mid-March. The yield later retreated, trading around negative 0.022 percent at 2:02 p.m. SIN/HK.
Investors expect the Fed to stay pat this month while speculation is rife that the BOJ will make some sort of change to its easing programme, though whether it would be major or minor is uncertain.
Dow member ExxonMobil dropped 1.5 percent after the Wall Street reported that U.S. securities regulators were investigating whether it boosted its financial statements with unrealistic accounting for low oil prices and the potential impact of climate mitigation policies. The Standard & Poor’s 500 index added 0.64 points to 2,139.76.
The British pound steadied after tumbling in the previous session, extending its losses after head of Germany’s Bundesbank warned on Monday that banks based in Britain could lose “passporting” access to EU markets after Britain’s pending exit from the European Union. Brent crude, used to price Global oils, slipped 7 cents to $45.88 a barrel in London. Euro slipped lower against the greenback on Tuesday as investors awaited the outcomes of Federal Reserve and Bank of Japan policy meetings that will conclude on Wednesday.
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West Texas Intermediate for November delivery, a new contract, was 78 cents higher at $44.83 and Brent was up 59 cents at $46.47.
