When is the BOJ rate decision and how could it affect USD/JPY?
|The Bank of Japan (BoJ) will conclude its latest policy meeting approximately at 2:00 GMT.
The central bank is expected to maintain its short-term interest rate target at minus 0.1 percent and a pledge to guide 10-year government bond yields around zero percent.
Inflation target remains elusive
BOJ could have depleted its policy arsenal, having provided unprecedented stimulus for nearly six years. The inflation, however, remains well short of the 2 percent target.
With the slowing global economy, price pressures may remain subdued. Further, demand-pull inflation could drop, courtesy of an impending sales tax hike.
Put simply, the 2 percent inflation target will likely remain elusive through the fiscal year 2019/20. Moreover, private economists are forecasting that headline inflation could turn negative this year.
The focus, therefore, is on the bank's inflation and growth forecasts and Kuroda's comments. The consensus is that the central bank has depleted its policy arsenal. So, while more stimulus is unlikely, the central bank also has little or no room to normalize its policy.
So, it could be argued that the BOJ is stuck between a rock and a hard place.
Impact on JPY
The potential downward revision of inflation forecasts is likely priced in by markets. The yen may find offers if Kuroda rebuffs demerit worries and says there is room to stimulate more.
BOJ rate decision
BoJ Interest Rate Decision is announced by the Bank of Japan. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the JPY. Likewise, if the BoJ has a dovish view on the Japanese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.
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