BoJ's Ueda: Will continue buying 'broadly same amount' of JGB as before
Following the Bank of Japan's first historic interest rate hike at the March policy meeting, BoJ Governor Kazuo Ueda said that the Bank “will continue buying 'broadly same amount' of JGB as before.”
Additional quotes
Judged sustainable, stable achievement of 2.0% inflation target comes in sight.
Accommodative conditions will firmly underpin economy, prices.
Will consider options for easing broadly including ones used in past if needed.
Confirmed virtuous cycle of wages, prices.
Massive monetary easing such as yield curve control, negative rates fulfilled roles.
Accommodative financial conditions will be maintained for the time being.
Decided to shift massive monetary policy as we judge achievement of 2% inflation is in sight.
Will set short-term interest rates just like other central banks that use short-term rates as policy tool.
Important to keep easy environment in place considering distance to 2% target in terms of inflation expectations.
We will carry out 'regular' monetary policy.
Not thinking of setting a name for new policy framework, since it is a 'regular' monetary operation.
Pace of further rate hike depends on economy, price outlooks.
Market reaction
USD/JPY keeps the upside momentum intact following these comments and the pair was last seen 0.87% higher on the day at 150.42.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
