The Bank of Japan’s decision to slow its JGB purchases and to broaden the range around its target for the 10-year JGB yield has inevitably attracted a lot of attention, although without provoking much reaction in markets.
In this note, I argue that fixation on BoJ balance sheet policy fits into a global theme of overestimating the fundamental effects of QE. Global asset prices have not been rigged by central bank purchases, including those at the BoJ. And monetary policy priorities in Japan do not seem set to change. For capital markets, the main issues are elsewhere.