Japan's central bank can reset its interest-rate target in one meeting, but selling its stock funds could take four decades.

Japan's central bank has decided to sell its stock funds about 2.6 times faster than usual, reducing the estimated time needed to dispose of them from 112 years to 43.

If you're wondering why such a supercharged exit still stretches across more than four decades, it's because the Bank of Japan is trying to undo years and years of purchases without disrupting the market it helped support.

Those numbers come from the BOJ's own calculation, which divides its end-September holdings by annual sales. They show just how long a monetary-policy experiment can outlast the decision to end it.

On Oct. 30, the bank held its overnight interest-rate target around 1.25% while approving faster ETF disposals from January 2027. The rate decision governs the current cost of money, and the sales program deals with assets accumulated under an earlier effort to make investors more willing to take risks.

Private buyers now have to accept more of that equity exposure, at prices the BOJ is prepared to accept.

The BOJ brought equity funds into its monetary easing program in 2010, when the bank wanted to encourage investment in an economy struggling with weak demand and deflation.

By buying exchange-traded funds, which hold baskets of company shares, the bank could gain broad stock market exposure rather than pick individual companies to invest in.

At the time, its stated objective was to reduce the extra return investors demanded for holding risky assets .

Source link