BOJ Maintains Dovish Language while Maintaining its Policy Bias Guidance

The Bank of Japan (BOJ) stated in its policy statement that it has maintained its policy bias guideline and that it will adopt more easing measures without hesitation if necessary, based on the impact of the epidemic on the economy.

June 17, 2022 - 01:00 PM 290 views

BOJ Maintains Dovish Language while Maintaining its Policy Bias Guidance

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© BOJ Maintains Dovish Language while Maintaining its Policy Bias Guidance

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The Bank of Japan (BOJ) stated in its policy statement that it has maintained its policy bias guideline and that it will adopt more easing measures without hesitation if necessary, based on the impact of the epidemic on the economy.

Key Takeaways

·    Until it is highly likely that no bids will be received, the April guidance of offering to buy 10-year JGBs at 0.25 percent every working day is still in effect.

·   The impact of currency movements on Japan's economy and pricing must be closely monitored.

·   Exports and output are continuing to expand, but the impact of supply restrictions is becoming more acute.

·   Consumer inflation in Japan is expected to hover around 2% for the time being, before slowing down.

·    Though there has been some weakening, Japan's economy is on the mend.

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

·    Core consumer inflation in Japan has been approximately 2%, owing primarily to increases in energy and food prices.

·    With the impact of covid-19 and supply-side limitations receding, Japan's economy is set to improve.

·    Japan's core consumer inflation is forecast to hover around 2% for the time being, before slowing down.

·   Japan's economy is beset by a slew of uncertainties, including domestic and international covid-19 trends,as well as developments in the Ukraine scenario.

·   It is necessary to pay close attention to changes in the financial and FX markets, as well as their implications for Japan's economic activity and prices.

The Market Reaction

The USD/JPY currency pair is trading at 134.24, down 1.59 percent from its daily highs of 134.59.

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