Bank of Japan · BoJ
The Japanese central bank — the longest-running experiment in unconventional monetary policy, having held rates near zero for most of 25 years until 2024.
Mandate
Established 1882, restructured under the Bank of Japan Act of 1997 to give it independence. Mandate: price stability (2% inflation target since 2013) and contribution to sound development of the national economy. Run by the Policy Board, including the Governor (currently Kazuo Ueda).
How it works
Policy Board meets eight times a year. Tools have included the policy rate, yield curve control (a target on the 10-year JGB yield), QQE (massive JGB purchases), ETF and J-REIT purchases, and forward guidance. The 2024 exit from the negative-rate / YCC regime is the first meaningful tightening in two decades.
Why it matters
Japan is the world's largest creditor nation; the JPY carry trade (borrow in cheap yen, invest in higher-yielding currencies including emerging markets) is a major driver of EM portfolio flows. When the BoJ tightens, the carry trade unwinds, which can drain liquidity from EM bond and equity markets. The August 2024 mini-crisis when BoJ hiked while the Fed signalled cuts illustrated this directly.
What to watch
Monetary Policy Statements (eight times a year), the Outlook for Economic Activity and Prices report (quarterly), JGB yield action especially at the 10-year tenor, USD/JPY currency moves.
More from Major global central banks
- Federal Reserve System · Fed
The central bank of the United States — sets the world's most consequential interest rate, supervises the largest US banks, and acts as lender of last resort to the dollar system.
- European Central Bank · ECB
The central bank of the euro area — sets monetary policy for 20 EU countries sharing the euro, the world's second-largest reserve currency.
- Bank of England · BoE
The UK central bank — the oldest continuous central bank in the world (1694), responsible for monetary policy, financial stability, and bank supervision in Britain.
- People's Bank of China · PBoC
The central bank of China — controls the world's second-largest economy's money supply, manages the renminbi, and is the most opaque major central bank.