Bank of Japan holds rates but surprises by speeding up sales of its ETF holdings

The Bank of Japan left interest rates unchanged on Friday, as markets had expected, but unveiled a faster pace for selling the stock market funds it accumulated during years of monetary easing, Reuters reports.

The decision on ETFs

• The BOJ will sell about 860 billion yen (about $5.45 billion) of exchange-traded funds (ETFs) per year on a book-value basis.
• Sales will be set at roughly 0.1% of market trading value, the central bank said, citing the expansion of the funds’ value in the stock market.
• At the new pace it will take about 43 years to finish selling the holdings, versus the previously estimated 112 years.
• The change takes effect from January 2027.

Market backdrop

Reuters’ Morning Bid noted that the announcement did not trigger major currency or bond moves. It came at the end of a week of central bank surprises, including a shock rate hold by the Reserve Bank of New Zealand and Christine Lagarde’s early resignation as head of the ECB. Japan’s Nikkei fell as much as 3% on Friday amid the global tech sell-off.