BOJ Rate Surprise Boosts World Stocks Ahead of Fed Decision

On September 21, 2016, the Bank of Japan (BOJ) surprised markets by adopting a target for long-term interest rates. This move lifted world stocks on Wednesday, with bank shares surging and the yen weakening.

The BOJ maintained its 0.1 percent negative interest rate but abandoned its base money target in favor of 'yield curve control.' Under this policy, it will buy long-term government bonds to keep 10-year bond yields around zero percent.

Michael Moen, a fixed income investment manager at Aberdeen Asset Management, said the move was positive for equity markets and bank stocks. He noted that the BOJ had acknowledged the negative rate policy's impact on bank profits and was trying to offset it with these measures.

However, Adam Cole from RBC Capital Markets expressed skepticism about the sustainability of the moves, saying they would be seen as a disappointment when the dust settles.