TOKYO: Japan’s Nikkei share average turned negative on Friday, while the yen firmed, after the Bank of Japan (BOJ) kept interest rates steady as expected, but in a split decision, with two of the nine board members voting in favour of a hike.
The central bank also announced it will begin selling its holdings of exchange-traded funds (ETFs) and Japanese real-estate investment trusts (J-REITS), amassed over a decade of massive stimulus.
Japanese government bond yields jumped to 17-year peaks.
“It came as a surprise,” Hirofumi Suzuki, chief currency strategist at SMBC, said about the BOJ’s decision.
“With the start of ETF sales and two dissenting votes against leaving policy unchanged, i.e., in favour of tightening, the outcome was hawkish despite expectations for a straightforward hold.”
Investor focus now shifts to BOJ Governor Kazuo Ueda’s news conference at 0630 GMT.
The Nikkei tumbled as much as 1.8 percent in the immediate aftermath of the policy announcement, and was down 0.5 percent at 45,099.98, as of 0508 GMT, about 80 minutes after the central bank’s announcement.
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