USD/JPY: No response to BOJ’s status quo decision

  • USD/JPY has barely moved in response to BOJ’s decision to keep key policy tools unchanged. 
  • The downward revision of the growth and inflation forecasts could push the JPY lower during the day ahead. 

The Bank of Japan kept key policy tools unchanged, as expected, a few minutes before press time, leaving the USD/JPY largely unaffected near 112.00. 

The central bank rates kept the interest 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 trillion 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.

BOJ modified forward guidance on interest rates

The policy statement said the interest rates will remain very low for an extended period, at least through spring 2020. 

Inflation forecasts revised lower

The median core consumer price inflation (CPI) forecast for fiscal year 2020/21 has been revised lower to 1.4 percent from 1.5 percent. 

Further, real GDP forecast for fiscal year 2020/21 has been revised lower to 0.9 percent from 1 percent forecasted in January. 

The downward revision of the inflation and GDP forecasts could weigh over the Japanese yen during the day ahead. 

Technical Levels

    1. R3 113.22
    2. R2 112.81
    3. R1 112.5
  1. PP 112.09
    1. S1 111.78
    2. S2 111.37
    3. S3 111.06


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