No Fireworks from the BoJ

Right on expectations and little change on JPY

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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