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According to MNI’s understanding, the Bank of Japan (BOJ) “will likely be able to steer away from guidance on policy rate levels, but may look to add to guidance on the timetable as to how long rates will remain at current or lower levels.”

This comes after the US Federal Reserve (Fed) decided on Wednesday to boost its bond-buying and keep rates lower through 2022.

Additional takeaways

“Bank of Japan considering tailoring its communication with financial markets look to nip any sustained yen rise in the bud.

BOJ officials are always sensitive to Fed policy decisions, more so perhaps than moves by the European Central Bank, and the impact on financial markets, particularly forex rates, as a strong yen rise would be a barrier to Japan’s recovery.

The central bank is now looking at whether it needs to refer directly to a timetable on long the BOJ maintains the current low-interest rates, either directly in the policy statement or verbally by Governor Haruhiko Kuroda in the following press conference.”

Market reaction

USD/JPY is trading flat at 107.08, having faded the latest uptick to daily highs of 107.28 on broad US dollar rebound. The yen ignores the above report, as it continues to draw support from the risk-off market environment.

 

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