Haciyev Reşit 
The Bank of Japan (BOJ) is entering a critical turning point closely watched by global financial markets. It has emerged that alongside an expected 25-basis-point interest rate hike on Friday, the BOJ has decided to sell the exchange-traded funds (ETFs) it has held on its balance sheet for years. According to experts, this move is considered one of the most fundamental shifts in Japan’s monetary policy in recent decades.
BOJ Interest Rate Decision Under Market Scrutiny
The Bank of Japan is expected to raise its policy rate to 0.75% on Friday. This level was last seen in 1995, after which Japan became known for years of low interest rates and aggressive monetary easing policies. For this reason, the move is seen not merely as a technical rate hike, but as a significant break from the long-standing ultra-loose monetary stance. The BOJ’s decision could directly affect pricing across Japanese bond markets as well as global equity and currency markets.
Economists predict that the central bank may implement at least one more rate hike by March. Such a scenario would indicate that price stability in the Japanese economy is becoming more sustainable. According to experts, this development represents a strong signal that Japan’s long battle with deflation has effectively come to an end and that the country is transitioning toward a more normalized monetary policy framework.
Bank of Japan Begins ETF Sales
According to information reported by Bloomberg, the BOJ has decided to gradually sell the ETFs it purchased in the early 2010s as part of its efforts to combat deflation. The sales are expected to begin in January, with the process emphasized to be extremely controlled. The total value of the BOJ’s ETF portfolio is approximately 83 trillion yen (around $534 billion). However, to avoid sharp market volatility, annual sales are planned to be limited to just 330 billion yen.
Given these figures, calculations suggest that the ETF sale process could take decades, potentially even more than 100 years. Officials believe that an aggressive sell-off could create significant pressure on the Japanese stock market.
“The BOJ’s primary priority is market stability. ETF sales will be conducted very slowly and in a controlled manner. In the event of a shock similar to the 2008 global financial crisis, halting sales entirely is also on the table.”
What Does This Mean for Global Markets?
The Bank of Japan’s decisions to raise interest rates and sell ETFs carry important signals for global investors. For Japanese markets long accustomed to a low-rate environment, these steps may mark the beginning of a new normal.
Analysts note that the BOJ’s actions could lead to a strengthening of the Japanese yen and short-term volatility in equity markets. In particular, risk perception across Asian markets is expected to be reshaped.
A Balanced but Historic Shift from the BOJ
The Bank of Japan’s interest rate hike and ETF sale decision is poised to be recorded as a historic shift in monetary policy. Planned to proceed slowly and in a controlled manner, this process aims to normalize policy without delivering sudden shocks to the markets. In the coming months, the steps taken by the BOJ will continue to be closely monitored by the global financial community.
You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.