Second, the Bank purchases treasury discount bills (T-Bills) and other assets, in addition to JGBs, to meet the monetary base target.6 Moreover, it regularly conducts fixed-rate fundssupplying operations (with a duration of mainly three months, but available up to one year). Therefore, these short-term operations exert downward pressure directly on short-term interest rates.
In contrast, the Federal Reserve purchases longer-term Treasury securities (with a remaining maturity from four to 30 years) and agency mortgage-backed securities (MBSs). The downward pressure on short-term interest rates is exerted through the forward guidance. Third, the Bank and the Federal Reserve have different views on long-term inflation expectations.