It
was a rangebound day for major FX in Asia here ahead
of the BOJ statement.
More
on the
BOJ
in a moment.
Otherwise
there
was no data of impact, and news flow was extremely light. We
had small dribbles from China on boosts to the economy. The next
round of monetary stimulus should come on Tuesday the 20th when
there is expected to be a cut to Loan Prime Rates.
And
so to
the
Bank of Japan. The Bank announced no change at all to its main policy
planks:
- maintained short-term interest rate target at -0.1%
- maintained
its 10-year JGB yield target around 0% - maintained
its band around the 10-year JGB yield target at + / – 50bp
The Bank repeated, again, that it expects the pace of inflation to slow from the middle of this Fiscal Year. This would be around September/October (Japan’s Fiscal Year begins on April 1). BOJ policymakers want to wait for signs of more sustainable, stable inflation before making a move to dial back easy policy.
The
BOJ policy committee said it made its decision on YCC by unanimous
vote. The
‘no change’ decision was widely expected, although after former
Governor Kuroda widened the band
around the 10-year JGB yield target back
in December last year, after repeated assurance he would do no such
thing, the risk of some surprise from a BOJ meeting has risen.
Market
response was a pop higher for yen crosses and Nikkei 225 futures.
Asian
equity markets:
-
Japan’s
Nikkei 225 -0.5% -
China’s
Shanghai Composite +0.3% -
Hong
Kong’s Hang Seng +0.6% -
South
Korea’s KOSPI +0.3% -
Australia’s
S&P/ASX 200 +0.6%
USD/JPY has pretty much given back its post-BOJ pop:
www.forexlive.com