Damn this politicians and policymakers. Japan has flush the economy with liquidity, rates are negative, BOJ has become one of the biggest shareholders not only in Japan but probably world over, they are also the largest bond holder of Japanese government bonds- they hold as much as 1/3! I thought they are running out of arsenal and would take a pause...but silly me! This growth hungry nation is now targeting to manage the Yield Curve. There is no pure capitalism or free markets! Most governments are tempering too much with markets and foundation of economic principles!

BOJ Shifts Policy Framework to Targeting Japan’s Yield Curve

The Bank of Japan shifted the focus of its monetary stimulus Wednesday from expanding the money supply to controlling interest rates, which some economists deemed as further evidence that BOJ policy had reached the limits of its effectiveness.
The central bank said it would adjust the volume of its asset purchases, the core of its framework until now, as necessary in the short term to control bond yields, while keeping it at about 80 trillion yen ($780 billion) annually over the long term. The BOJ also scrapped a target for the average maturity of its holdings of government bonds.

The changes will help the BOJ manage the impact of its purchases and negative interest rates on Japanese banks, whose profits have been squeezed by a narrowing of short-term and long-term yields. Governor Haruhiko Kuroda and the policy board kept that negative rate, imposed on a share of bank reserves, unchanged at minus 0.1 percent.

Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo, saw the shift as a tacit admission by the BOJ that it has reached the limits of its JGBs purchases. The BOJ now owns more than a third of outstanding JGBs, with the pace of its buying draining the market of supply.

Full article: click here: http://www.bloomberg.com/news/articles/2016-09-21/boj-shifts-policy-framework-to-targeting-japan-s-yield-curve

Japan's GPIF reports 3.88% loss for latest quarter

Japan's Government Pension Investment Fund reported an investment loss of 3.88%, or $52 billion, for its fiscal first quarter ended June 30, with a rising yen and falling domestic stock prices pushing the Tokyo-based giant's portfolio below ¥130 trillion ($1.27 trillion) for the first time since the close of 2014.

Following a 3.52% investment loss for the quarter ended March 31, the fund's latest returns marked a second consecutive quarter of steep losses, amid growing investor doubts as to whether Japanese policymakers have the tools needed to pull the country's economy out of a prolonged period of deflationary low growth.

GPIF's investment portfolio stood at ¥129.7 trillion as of June 30, down from ¥134.7 trillion at the end of the prior quarter and, for the first time, dipping below the level that prevailed on Oct. 31, 2014, when the fund adopted a higher-risk, higher-reward asset allocation plan.

On the argument that Prime Minister Shinzo Abe's aggressive economic stimulus plans made it imperative to shift assets out of low-yielding Japanese government bonds in favor of equities and overseas bonds, the fund slashed its target allocation for JGBs to 35% from 60%, while more than doubling its targets for domestic and overseas equities each to 25% from 12%. GPIF's target for overseas bonds, meanwhile, rose to 15% from 11%.

Full Article at:
http://www.pionline.com/article/20160826/ONLINE/160829904?AllowView=VDl3UXlaT3hDUEtCblIzQURleUhaRUt2ajBRV0ErOWRIUT09&utm_campaign=smartbrief&utm_source=linkbypass&utm_medium=affiliate

Let markets decide the rates- not politians or government!! BOJ's Kuroda says won't rule out deepening negative rate cut-Sankei

The basic foundation of market economy is free markets. Let markets decide prices and ....interest rates. However, many corporate have now mastered the skills to control prices, politicians and central banks on the other hand have taken up the task of deciding interest rates!! To achieve growth and economic expansion, spenders and speculators are encouraged at the expense of disciplined consumers and savers! Retired people as punished as they are not able to get interest income and are forced to move to risky assets.  

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The Bank of Japan will not rule out deepening a cut to negative rates it introduced in February, the Sankei newspaper quoted Governor Haruhiko Kuroda as saying, even as the controversial policy has failed to spur inflation or economic growth.

In an interview with the daily, Kuroda said the BOJ's negative rate policy has not reached its limits.

"The degree of negative rates introduced by European central banks is bigger than Japan. Technically there definitely is room for a further cut," Kuroda told the Sankei.

The BOJ stunned markets in January when it set a minus 0.1 percent rate on some deposits that banks place at the central bank, with the move taking effect from February.

While the BOJ hoped the shift to negative rates would encourage banks to lend more, spurring higher spending and inflation, none of that has happened as yet.

The BOJ will also consider whether to make any changes to the 80 trillion yen ($798 billion) per year massive asset-purchase plan once the outcome of a comprehensive assessment of its monetary policies is out in September, Kuroda said.

Full article at:
http://www.reuters.com/article/us-boj-kuroda-idUSKCN10V05R

Japan's government: world's No.2 economy has bottomed out

Japan's government raised its assessment of the economy for the second straight month and said the world's No.2 economy has bottomed out as exports and factory output recover from sharp declines.

The government lowered its outlook on capital expenditure, however, after Finance Ministry data earlier this month showed corporate spending posted a record fall in the first quarter from a year earlier, signalling that weak domestic demand will weigh on the recovery from the worst recession since World War Two.
'While the economy is in a difficult situation, movements of picking up are seen in some areas,' the Cabinet Office said in the monthly report released on Wednesday.
The report omitted an expression used to describe the economy last month, when it said 'the pace of deterioration is slowing'.
The upgrade is equivalent to saying Japan has hit bottom but further weakness cannot be ruled out, a Cabinet Office official said.

Full post at: Japan govt says economy bottomed out, upgrades view