The JPY strengthened initially on the back of this morning’s policy statement from the BoJ, but softened as Governor Kuroda spoke at his press conference, notes the research team at Rabobank.
“As expected the BoJ left policy unchanged at the end of its 2-day meeting. The Bank’s statement maintained that “medium- to long-term inflation expectations are projected to rise as firms' stance gradually shifts toward raising wages and prices with an improvement in the output gap continuing”. Despite these hopes for an improvement in the inflationary outlook, Kuroda’s comments were clearly aimed at crushing speculation that the Bank was considering backing out of its huge QQE programme.”
“He insisted that “the economy needs persistent monetary easing” and that the BoJ “was not at the point to consider an exit”. He also made clear that the target of BoJ QQE policy is the yield curve and not the amount of JGBs purchased. This comment was clearly aimed at clarifying why the size of BoJ bond purchases lessened at the start of the month. Although USD/JPY has gained on the back of Kuroda’s comments, it remains a touch below yesterday’s high.”
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