The Bank of Japan is in no mood to tangle with equity markets and it’s safe to re-enter the carry trade.
That was the message from Bank of Japan deputy governor Uchida earlier today.
“We won’t hike rates
when markets are unstable,” he said, adding that their interest rate path will obviously change if, as a result of
market volatility, our economic forecasts, view on risks and
likelihood of achieving our projection change.
Uchida added that the reversal of the weak yen means the risk of an inflation overshoot has diminished and that there is no gap between his sentiment and Governor Ueda.
These comments clear out a primary hurdle to a global rebound in equity markets and risk trades. They show that markets are still in charge, not central banks.
See also: The Fed put worked.
This article was written by Adam Button at www.forexlive.com. Source