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BoJ Pays Lip Service To FX Market But Continues Powerful Easing


The BoJ maintained its steadfast commitment to ultra-loose monetary policy and kept all of its main parameters unchanged but made a rare reference to the FX market.

  • Officials voted 8-1 to keep the current yield curve control settings unchanged (Goushi Kataoka is the usual suspect for a dovish dissenter) and continue to conduct fixed-rate purchase operations for 10-Year JGBs every business day.
  • The central bank maintained its overall assessment of the economy and a bias towards continuing with its QQE until reaching their inflation target in a stable manner.
  • Not only there were no tweaks to the YCC framework, but the Bank's messaging remained unchanged, signalling no plans to alter the ultra-loose stance anytime soon.
  • In an unusual move, policymakers made a reference to currency markets, noting that "it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on Japan's economic activity and prices."
  • The BoJ was likely forced to include FX comments due to the yen's slide to 24-year lows earlier this week. But messaging on that front is largely inconsequential and falls short of some of the more aggressive comments from Japanese financial officials, with no mentions of importance of FX stability or negative impact on the economy.
  • There was broad local consensus that the Bank would stand pat today, but some offshore market participants started questioning the BoJ's resolve this week.
  • Click here to see the full statement.
  • Governor Kuroda will hold his press conference around 15:00 JST/07:00 BST.

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