BOJ shakes up rules – New charts and summary for future path and transparency

While Bank of Japan (BOJ) Governor Kuroda maintained monetary policy steady today, he shook up the policy frameworks heavily in order to ensure greater transparency to decision making and clear communication to financial markets.

Changes BOJ will undertake -

• Releasing the Outlook for Economic Activity and Prices on a Quarterly Basis -

The Bank currently publishes the report semiannually and making the release quarterly it would provide greater transparency to BOJ's estimates and changes and reaction function to such. These reports will be released in January, April, July and October after the policy meeting.

• Releasing Each Policy Board Member's Forecasts for and Risk Assessments of the Economy and Prices -

This is a vital step taken by BOJ. The above sample chart shows how it would be released. Like one can read from the chart how many of the bank's members are hawkish or dovish on inflation forecast and economic growth.

• Releasing "Summary of Opinions" -

BOJ within a week of monetary policy will release summary of opinions. This is likely to provide glimpse of what monetary policymakers are having in their mind.

• Changing the Frequency of Monetary policy meetings -

As of now BOJ meets 14 times a year but from now on they will be conducting monetary policy at eight times a year.

The new approach will somewhat change how the analysis of BOJ policy is done by economists and market participants.

Yen is currently trading at 123 against dollar.