BOJ leaves unchanged its guidance on policy bias, maintains dovish rhetoric

In its policy statement, the Bank of Japan (BOJ) noted that it left unchanged its guidance on policy bias, adding that it will take additional easing steps without hesitation as needed with an eye on the pandemic's impact on the economy.

Additional takeaways

April guidance of offering to buy 10-year JGBs at 0.25% every business day unless it is highly likely no bids will be submitted.

Must carefully watch impact of forex moves on Japan’s economy, prices.

Exports, output continue to rise as a trend but impact of supply constraints heightening.

Japan's consumer inflation to move around 2% for time being but narrow pace of increase thereafter.

Japan's economy picking up as a trend, though some weakness has been seen.

Japan's inflation expectations, particularly short-term ones, have risen.

Japan's core consumer inflation has been at around 2%, mainly due to rises in energy and food prices.

Japan's economy is likely to recover with impact of covid-19 and supply-side constraints waning.

Japan's core consumer inflation likely to be at around 2% for time being, but expected to decelerate thereafter.

Japan's economy faces extremely high uncertainties including from covid-19 trends at home and abroad, developments in Ukraine situation.

Necessary to pay due attention to developments in financial, forex markets and their impact on Japan’s economic activity, prices.

Market reaction

USD/JPY is off the daily highs of 134.59 but adds 1.59% on the day to now trade at 134.24.