Investing.com – Following the Japanese monetary authority's decision to keep interest rates at 0.10%, having previously abandoned ultra-loose policy with negative interest rates, the perception with bond buying ending later than expected is that the yen will weaken, Julius Baer noted. In a note on Friday. Expectations indicate that the value of the currency will fall to 160, from the current 157.46.
“Bond purchases will now be carefully phased out and will only begin in July. The end of bond purchases later than expected and the lack of change in interest rates disappointed hopes and weakened the yen,” the Swiss group noted.
Details on how to phase out bond purchases are only expected to emerge at the next meeting, which would have disappointed investors, says David Cole, chief economist at Julius Baer.
“It is now very likely that policy will be tightened at the next meeting, but it will likely be done cautiously,” adds Cole, who expects interest rates to rise by 10 basis points in July.
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