On Tuesday, the USD/JPY currency pair is trading upwards after the March meeting of the BoJ and its comments regarding inflation.
The Japanese Yen is becoming more expensive again. The pause in the series of the Yen strengthenings was very short. The current quote for the pair is 112.75. The March’s low is at 112.22, the next “bottom” – 111.04.
Another meeting of the BoJ ended today. This is the “week of the Central Banks” – one meeting after another, investors are nervous. In general, everything went off without a hitch: the interest rate is -0.1%, the same as earlier, motivation program is being expanded up to 80 trillion Yen per year. Among the intentions of the Central Bank is to correct the policy regarding negative rates a bit (there are issues here) and deterioration of expectations relating to export and cash injections into the housing market.
Only the passing mention was made of the inflation, the topic that is interesting for investors. Members of the Central Bank stated that the number of 2% will be reached in the nearest future. The Governor of the BoJ, Mr. Haruhiko Kuroda pointed out that the target of the CPI remains stable, the core inflation will move towards the target. But all of these we knew before. It’s interesting that he explained the efficiency growth of the negative interest rates policy: according to his words, the policy is intended to decrease borrowing costs, which may later have influence on price trends. Hereat, real and objective interest rates have been notably decreased since the moment the Central Banks implemented its policy of the negative rate. So far, the efficiency of the program is still being monitored, but the results are already here and they are quite efficient.
As a matter of fact, there is not much the Japanese Central Bank can do right now, except for continuing motivating and observing. Sooner or later, the effect will show up and push the system upwards.
RoboForex Analytical Department
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