Thoughts on BoJ's short-term rate guidance in post-NIRP world
Key points
- What form will guidance of short-term interest rates take if BoJ winds down NIRP?
- We expect Bank will guide uncollateralized overnight call rate -- i.e., risk-free rate -- into positive territory
- Bank may replace three-tiered reserve framework with two tiers and guide short-term rates using fund-absorbing operations
