BOJ will make negative rates the centerpiece of future easing

The Bank of Japan is on the verge of making negative interest rates the centerpiece of its future monetary easing by simply shifting its prime policy target from base money to interest rates at its review next week.

The change would underscore surging worries in the major bank as well as financial markets regarding the limits to the BOJ's increasing bond purchases, because more than three years of aggressive buying definitely drains market liquidity.

It would also be a shift away from the BOJ's monetary experiment aimed at crushing yields across the curve and convincing the public that its massive money printing will spur economic activity as well as prices.

Among the major bank’s policy tools, the priority will probably shift towards interest rates and away from decent bond purchases.  

Financial analysts are assured that the BOJ is unlikely to cancel its current base money target, that’s the amount of money committed to print every year.