Bank of Japan leaves negative rates and YCC 1% ceiling rate unchanged

Bank of Japan announces their main policy planks remain in place untouched, as expected.

USD/JPY has jumped sharply higher.

  • Maintains short-term interest rate target at -0.1%
  • Maintains 10-year JGB yield target around 0%, with 1% upper reference rate kept unchanged
  • YCC decision unanimous
  • BOJ makes no change to forward guidance

More

  • Economy has recovered moderately
  • Private consumption
    continues to rise moderately
  • Y/y rate of rise in
    CPI slower than a while ago mainly due to effects of pushing down
    energy prices
  • But CPI has been
    around 3% recently due to pass-through of cost increases to consumer
    prices
  • Inflation
    expectations have risen moderately
  • Economy likely to
    continue recovering moderately for time being
  • Japan economy
    projected to continue growing at pace above potential growth rate
  • Rate of rise in CPI
    likely to be above 2% through fiscal 2024
  • Thereafter, rate of
    rise projected to slow down
  • Underlying CPI
    inflation likely to increase gradually toward achieving price
    stability target
  • Japan’s economy likely to continue recovering moderately
  • Inflation
    expectations heightening moderately
  • Trend inflation
    likely to gradually accelerate
  • Inflation likely to
    move above 2% then slow pace of increase thereafter
  • Uncertainty
    regarding japan’s economy, prices remain very high
  • Must scrutise fx,
    market moves and their impact on economy, prices

This article was written by Eamonn Sheridan at www.forexlive.com. Source