Commenting on the Bankı of Japan’s (BoJ) monetary policy announcements this week, “the BoJ made no formal policy changes at its meeting on September 19 but there is still plenty for the markets to digest,” said Rabobank analysts.
Key quotes
“The policy statement showed that the BoJ considered it was necessary to pay “closer attention” to the chance that momentum towards achieving its 2.0% inflation target could be lost. At his post meeting press conference BoJ Governor agreed that he was becoming more keen to ease policy compared with the previous meeting in July.
“The day after the meeting the BoJ has made significant cuts to its bond purchases. This has been taken as a signal that policy makers are committed to fighting off pressures that have flattening the yield curve in a reassertion of the ‘yield curve control’ aspect of its policy.”
“While further easing by the BoJ should technically undermine the value of the JPY, its safe haven appeal means that international and geopolitical news can be the overwhelming driver of the currency. Bearing in mind the slow-down in global growth and tension between the US and China and the US and Iran, we see scope for USD/JPY to pushed lower by safe haven demand towards the 105.00 area on a 3 month view.”
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