Talking Points:
- Yen gains as the BoJ keeps monetary policy setting unchanged, as expected
- BOJ to expand monetary base by ¥80 trillion/year until inflation hits 2 percent
- Nikkei 225 falls alongside USDJPY as flat BOJ outcome inspires risk aversion
The Japanese Yen advanced as the Nikkei 225 stock index declined after the Bank of Japan opted to keep its monetary policy mix unchanged. The central bank said that it will continue to increase the monetary base at an annual pace of ¥80 trillion until inflation is stable at 2 percent.
While the status-quo outcome was widely expected, worries about slowing global economic growth have fueled broad-based hopes for additional accommodation from the world’s top central banks. Within that context, the BOJ’s decision appears to have weighed on risk appetite, pushing stocks lower and offering support to the safety-linked Yen.
Highlights from the Bank of Japan’s October 7th monetary policy statement:
- Plan for ¥80 trillion annual rise in monetary base retained
- QQE will continue until 2 percent level of inflation is reached
- Japan’s economy has continued to recover moderately
- Inflation expectations rising from longer-term view
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