Asian stock markets managed to achieve broad gains, with Japanese markets outperforming and the Nikkei index rising 1.4%, after the Bank of Japan’s pessimistic tilted announcement left policy settings unchanged, but indicated a long-term review of the general framework, emphasizing that the easing bias remains in place. .
The Bank of Japan called for a “broad perspective review” of policy, with a time frame ranging from 1 to 1.5 years. There has been speculation about this, especially after a Nikkei News story pointed this out. But it is not clear that it will be announced today at the first meeting of Governor Ueda. The bank left its policy unchanged at -0.1% and the 10-year Japanese government bond yield target, YCC, at around 0% with a 0.5% cap. The unanimous rate decision was 9-0. The bank also indicated that it was canceling forward guidance. The bank said it would “patiently continue” monetary easing. Risks to the price outlook for FY2023 are to the upside, but downside for 2025. It expects core CPI to be 1.8% for FY2023, up from 1.6% prior and 2.0% in FY24 from 1.8% prior. GDP is expected to be 1.4% compared to the previous 1.7% for FY2023 and 1.2% for FY2024 compared to 1.1%.
Ueda says the BoJ will not hesitate to add easing if needed. Ueda, who in his first policy meeting rescinded the price directive and called for a policy revision, suggested that this revision is not linked to an immediate policy change, but will appear in an internal analysis of exports. He emphasized that the current policy stance is one of continued easing, and that the Bank of Japan will not hesitate to add more easing measures if necessary. The Bank will continue to strive for a stable inflation rate of 2%. Ueda said that inflation is currently high and may continue for a few more months, and inflation is likely to slow from the middle of the current fiscal year. He added that he is not sure how inflation will rise after it weakens, and that the Bank of Japan will respond flexibly as it tries to reach its inflation target. Ueda said he sees a greater risk of premature tightening for now, also emphasizing that the announced policy revision does not indicate a change in the policy’s immediate stance.
US dollar / Japanese yen climbed to 135.80 from the lowest level 133,381 Given the best of 1 year for review. A 50-minute delay in the announcement vs. ATV sent the JPY into a jitter and USDJPY dropped to lows before the headlines hit. The Yen broke the main resistance level at 135, which is the confluence of 61.8% Fibonacci. Since the February highs and also the two-month resistance level. With momentum picking up to the upside, a retest of the February highs at 137.00 And 137.80 He can be seen next week.
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Andrea Pechedy
Market analyst
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