When is the BOJ rate decision and how could it affect USD/JPY?

The Bank of Japan (BOJ) policy statement will be released around midday, followed by a press conference with Kuroda at 3:30 p.m. local time, according to Bloomberg.

The central bank is likely to leave on hold its current interest rate and asset purchase setting.  So, markets would watch out for Kuroda's take on the recent weakening of inflation in Japan.

Also, Kuroda is expected to reiterate that recent changes in bond buying were a part of routine operations and does not imply policy change.

Rising monetary policy divergence could hurt Yen

Fed raised the interest rate by another 25 basis points this week and signaled faster rate hikes and ECB's Draghi pulled the plug on the QE program.

Meanwhile, the BOJ is unlikely to begin unwinding its stimulus program anytime soon. A majority of economists polled by Reuters earlier this week said the BOJ will likely begin tapering its QE program sometime in 2019.

Clearly, the BOJ is the odd man out and the status quo policy announcement today would only highlight the growing monetary policy divergence and will likely push USD/JPY higher.

The JPY will likely pick up a strong bid if Kuroda sounds hawkish, although the probability of BOJ adopting a hawkish stance is quite low.

About BOJ 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.

 

 

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