At some point, the BOJ is expected to slow the pace of JGB purchases, but with inflation remaining stubbornly below the 2 % target the BoJ maintains current policy guidance.
While currency concerns are not within the BoJ overall purview, but with risk perking up, the Yen’s near to medium term tangent will likely be determined by interest rate differentials. So, the BoJ was doggedly cautious to avoid any language that could be misconstrued as an adjustment in monetary easing.
I suspect the BoJ is a long way from adjusting policy and will like to err on the side of letting the economy and inflation overreach before tapering. Also, with Trump fiscal policies starting to materialise and the US economy picking up, the BOJ likely views the Fed raising rates twice in 2017, and if USDJPY firms above the 115 level, it may offer the BoJ more wiggle room for a more advancing policy stance later in 2017
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Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.