The Other YCC: Yen Crushed Control

Why the Bank of Japan may sneak a shock rate hike into the April meeting (JPY, obviously), and why Ministry of Finance is frozen in conducting yentervention. Japan policymakers' new roles.

Anyone see that latest press leak article to pre-announce Bank of Japan’s policy statement published by Nikkei as we head into the April meeting?

Neither did I.

How about any other media outlet- domestic or otherwise, pre-leaking BOJ? Bloomberg? Reuters? Car & Driver Magazine?

Nothing. How very strange. Even “no change” meetings are at least given SOME heads up from “people familiar with the matter” - where are all the familiar people leaking material non-public information to the press for absolutely no personal gain this time?

Well, I got news for you: Bank of Japan is out of the press testing pre-announcement game, for now. And while we’re at it - Ministry of Finance is also self-sidelined from the yentervention game (the actual execution of), for now.

This article will explore the significance of this shift in Governor Ueda’s BOJ communication protocol of abandoning press-leaking, and how it ties in with yentervention, which is now being outsourced from Ministry of Finance’s tied-up, trembling hands, and into the Bank of Japan’s portfolio.

This is not a one-time guess for the coming April Bank of Japan policy meeting - this is an outline of the new dynamics for financial policy and market control out of Japan - for which we may see in action with a shock rate hike starting at the April BOJ meeting.

In the immediate term, Bank of Japan, Ministry of Finance, Financial Services Agency and every other policy body has to drop everything for an all-hands-on-deck effort in stopping JPY’s relentless decline.

Currency is not in BOJ’s remit? Fine, and I’m sure that division of labor is genuinely respected over the long run. But for now, BOJ is in the business of countering JPY downside, because Japan wage inflation doesn’t tick higher every weekday between Tokyo session close and London session open, like USDJPY does.

And remit or not, if Ministry of Finance is in a state of yentervention paralysis, then Bank of Japan needs to pinch hit.

Here is how I came to this theory of the Bank of Japan as the nation’s acting currency chief - it begins with Governor Ueda’s press leaking strategy that is now under fire.