BOJ leaves monetary policy unchanged, as widely expected


On Tuesday, the Bank of Japan (BOJ) monetary policy board concluded its 2-day January policy review meeting and decided to keep its monetary policy settings unchanged, holding rates at -10bps while maintaining 10yr JGB yield target at 0.00%.

The BOJ vote was 8 to 1, leaving its pledge to buy JGBs unchanged so that its holdings increase at an annual pace of around 80 trln yen.

The decision on maintaining its interest rate targets was made by a 7-2 vote with board members Goushi Kataoka and Yutaka Harada dissenting.

The central bank maintained forward guidance on interest rates, saying “they will remain at current or lower levels for as long as needed to guard against risk momentum for hitting price goal may be lost”.

About BOJ Interest 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.

FX Implications

The Yen was unfazed by the BOJ announcement, leaving the USD/JPY pair in a familiar range below 110.00, -0.20% on the day.The Yen was unfazed by the BOJ announcement, leaving the USD/JPY pair in a familiar range below 110.00, -0.20% on the day.

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