- USDJPY continued to correct higher after a status-quo BOJ policy announcement
- BOJ will continue to target ¥60 – 70 trillion annual expansion in the monetary base
- Next few months key on deciding whether sales tax will be increased to 10 percent
The Japanese Yen continued to reverse its earlier gains after the Bank of Japan announced that it will maintain its policy of increasing the monetary base by ¥60 – 70 trillion annually,in line with expectations. In its policy statement, the BOJ continued to affirm the moderate recovery of the Japanese economy and remained committed to its loose monetary easing policy with a 2 percent inflation target. The Bank’s acknowledgement of probable “fluctuations due to the consumption tax hike” was notable however.
Speaking last month, BOJ Governor Kuroda expressed confidence that the consumption tax hike will not have a major impact on the Japanese economy. However, he also suggested that the BOJ would be prepared to implement further monetary easing measures should there be signs that the economy reacts in a significant way. Regarding the tax hike, Finance Minister Aso said last week that the next few months will be crucial for the Ministry of Finance to decide on whether to go ahead with a further increase in the consumption tax to 10 percent.
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USDJPY (5min chart) April 8, 2014 | Created by FXCM Marketscope