What it is
The Bank of Japan is one of the world's most influential central banks, known for its unique and unconventional monetary policies aimed at combating deflation and stimulating economic growth. Its primary tools include setting the short-term policy interest rate, conducting open market operations, and, notably, implementing yield curve control to manage long-term government bond yields. The BOJ also provides liquidity to the financial system and oversees financial institutions.
The BOJ's policies, particularly its extended period of ultra-low or negative interest rates and quantitative easing, have significant global implications. Its stance can influence the yen's exchange rate, impacting international trade and investment flows, notably through the yen-carry-trade. Global investors closely monitor BOJ announcements for any shifts in policy, as these can affect global bond yields and the overall appetite for risk in financial markets.
Why it matters
The BOJ's unconventional policies affect global interest rates, currency markets, and investment strategies, particularly for those involved in international finance.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice