Bitcoin Volatility Expected on Friday's Bank of Japan Rate Decision. Here's Why

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Move over Fed, the IMFNews has urged the Bank of Japan to move away from liquidity-boosting yield curve control. The policy tweak might be announced on Friday and could influence global liquidity conditions. reports godbole17.

Perhaps the Bank of Japan , the world's third-largest central bank and the only heavyweight maintaining a very loose pro-liquidity policy, might do the trick.

According to several investment banks, the BOJ on Friday will likely soften its grip on the country's bond markets, potentially influencing global bond markets, exchanges rates and liquidity conditions. Bitcoin and cryptocurrencies, in general,Since September 2016, the BOJ has been running a yield curve control program, committing to purchase as many government bonds as required to keep the 10-year government bond yield near 0%.

"Broadly speaking, initial steps could include either widening the 10-year JGB yield band or focusing on the shorter maturity zone. Our base scenario is the latter, though it could be a close call. The former option may be viewed as desirable, particularly given that the effects of band widening is likely easier to anticipate for the market," Goldman Sachs' economics research team said in a note to clients on July 21.

"However, assuming that the BOJ maintains its 10-year target at 0%, then widening the band to ±100 bp from ±50 bp at present, for example, would be akin to the BOJ effectively scrapping YCC or admitting it has lost the ability to control yields," the research team added.

 

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