Bank of Japan Maintains Stimulus Praises Fed for US Recovery

Japan’s central bank held its massive monetary expansion unchanged on Friday, and played down chances of the need for an extra dose next year as it took heart from the U.S. Federal Reserve’s decision to begin tapering its own mega-stimulus.

Speaking after a Bank of Japan policy-setting meeting, Governor Haruhiko Kuroda welcomed the Fed’s move as a sign that the U.S. economy is recovering steadily, which bodes well for global growth and Japan.

Kuroda also played down the likely impact of a planned increase in Japan’s sale tax in April on the economy, saying the country was on course to meet the BOJ’s 2 percent inflation target in two years to decisively exit from a long phase of debilitating deflation.

The widening interest rate gap between Japan and the United States, as the BOJ maintains its ultra-easy policy while the Fed winds down its stimulus, is likely to keep the yen weak against the dollar, analysts say.

The dollar hit a fresh five-year high of 104.59 yen on Friday, extending the weak-yen trend that has helped Japan’s export-reliant economy emerge from stagnation.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza