Explaining BOJ Policy and Market Dynamics via 17 Years of Experience | Column 5: Yuto and the BOJ ①

1. The Relationship Between the BOJ and the Market | Why Prices Move Early on "Anticipation"

At its Monetary Policy Meeting on December 19, 2025, the Bank of Japan raised its policy interest rate to 0.75%. This news spread across the nation in an instant.

Once you begin thinking about building your wealth, there is hardly a day where you do not encounter the acronym "BOJ." However, capturing its actual reality with precision can be quite challenging.

In this column, I want to reflect on my 17 years of investing experience to explore how retail investors should genuinely approach the presence of the BOJ.

2. How BOJ Monetary Policy Affects the Market | Organizing the Movements of Forex, Stocks, and Interest Rates

Throughout my 17 years as an investor, the actions of the BOJ have primarily manifested in five distinct ways. I will outline four of them here in Column 5.

① BOJ Currency Intervention | How It Impacts a Strong or Weak Yen

When rapid depreciation or appreciation of the yen occurred, the BOJ stepped in with **"currency interventions."** I have witnessed numerous tug-of-war moments in the foreign exchange market between speculative traders and the central bank. It felt like an expression of intent regarding exchange rates from the BOJ and the Japanese government. I understood that these interventions were carried out for the sake of the Japanese economy. On the flip side, when it comes to long-term asset building, I eventually came to view these occurrences as temporary events—nothing more than "noise."

② Stock Market Stabilization (ETF Purchases) | How the Market Reacts

There was a period when Japanese stock prices dropped day after day because buyers were nowhere to be found. Yet, on certain days, stock prices would suddenly rebound despite a total lack of positive news. Later, I would find out that this was due to "the BOJ's ETF (Exchange-Traded Fund) purchases"—in other words, a direct stabilization of stock prices. Experiencing market rallies without understanding the underlying reason always left me with a slight sense of discomfort.

③ BOJ Government Bond Purchases (Monetary Easing) | Supporting the Economy's Foundation

The Japanese government issues government bonds to secure the budget required for economic packages and defense policies. As a result, Japan's national debt continues to expand. The BOJ has long reigned as a massive buyer of these bonds, which exceeded 1,300 trillion yen by the end of fiscal 2024. While less conspicuous than currency interventions, it feels like a theme that has quietly supported the very "foundation" of the Japanese economy over a multi-decade horizon.

④ BOJ Interest Rate Policy | How Shifting Rates Influence the Market

The BOJ's policy interest rate was recently raised to 0.75%, a level not seen in roughly 30 years. Shifts in interest rates are widely understood to exert a powerful influence over both currency exchange rates and broader stock prices.

3. Should You Shift Your Investment Stance Based on BOJ Policy Changes? | A Long-Term View

My wealth accumulation framework is structured entirely on the premise of capturing the overarching growth of the global economy. If a rate hike leads to a phase where the yen strengthens against the US dollar, it can temporarily look as if global economic value is shrinking when measured in yen.

As long as you operate under the core premise of participating in global economic growth, there is simply no need to repeatedly buy and sell your holdings out of excitement or anxiety over the BOJ's policy shifts.