Will the Bank of Japan trigger an avalanche? What will the week bring?

Last week we got to know the monetary decisions of the three main central banks. In line with analysts' forecasts, the level of interest rates was raised both in the United States and in the euro zone. Paradoxically, however, these are not decisions Fed or EBC, and the actions of the Bank of Japan may have the greatest impact on the markets in the coming months. Will the BoJ decision trigger an avalanche?

Will the BoJ start an avalanche?

When even Swiss National Bank tightens its monetary policy, Bank of Japan kept interest rates negative last week. However, it was not the decision on the level of interest rates, but the shape of the yield curve control policy that turned out to be a breakthrough. The BoJ extended the range of deviation of 10-year government bond yields around +/- 0,5%. What does it mean?

Until now, when the price of Japanese government bonds fell (so their yields rose), the Bank of Japan immediately bought them, thus providing additional liquidity to the market. When the tolerated increase in profitability will reach even 1%, Japanese reprint will shrink significantly, and perhaps even cease. Why is it so important?

Despite the fact that the Japanese economy is smaller than the European one, the value of financial instruments on the Bank of Japan's balance sheet exceeds that of the ECB. After decades of ultra-loose monetary policy, further tightening by the BoJ is likely to have an impact on both the global equity and bond markets.

In today's webinar:

• Will the Bank of Japan trigger an avalanche?
• There will be no recession?
• What do macroeconomic data tell us?

About the host

Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.

CFDs are complex instruments and involve a high risk of a quick loss of cash due to leverage. 76% of retail investor accounts record monetary losses as a result of trading CFDs with this CFD provider. Consider whether you understand how CFDs work and whether you can afford the high risk of losing your money.