Bank of Japan summarized its two-day monetary policy meeting. The current path and the level of interest rates remained consistent – but bank raised its projections regarding the gross domestic product.
Inflation at 2% in fiscal year 2018
According to statement published by the Bank of Japan, policy interest rates and the asset purchase program has not been changed however, was extended for one year time of buying debt in terms of its lending program.
Regarding the inflation projections is maintained at the same level. Lowered only was forecast for inflation at the turn of 2016/2017 to 0.2% (previously they talked about -0.1%). Kuroda and the company continues to maintain that in the fiscal year 2018 the dynamics of the price will rebound to the target of 2%.
In terms of GDP we observed positive changes in forecasts. The Bank of Japan expects that at the end of the fiscal year 2017/2017 GDP will amount to 1.5%, instead of the previously expected +1.3%.
Statement was predictable, with little impact on markets. At night there was also a lot of data from the economy of the country of the rising sun, but those also did not confer JPY volatility.
What Kuroda said at the press conference?
At the beginning of the European morning – at 07:30 – on the podium appeared Haruhiko Kuroda summarizing the results of the BoJ. Here are some of the most important headlines of the speech the governor of the central bank:
- The economy is still growing
- In 2018 will exceed its current potential appreciation
- Negative interest rates will achieve the target levels of inflation
- Monetary policy has a huge impact on prices
- Kuroda hopes that the market expectations for Japanese inflation finally begin to grow
- It is too early to discuss plans to exit the program QQE
- BoJ doesn’t seek to influence the course of JPY
Price for the USD / JPY repeatedly tested Monday’s minima 113,444, where the statement of Haruhiko Kuroda eventually led to the successful re-test and tried to rebound. Today, however, the attempt is stopped at level of 23.6% depreciation of the abolition of the last three sessions. But as long quotations will not fall below today’s support, we will not consider a scenario in which the USD / JPY will again fall.
On EUR/JPY situation is quite similar. Quotations also tried several times to test Monday’s minima (a series of long lower wicks), which finally brought rebound after 08:00 our time:
Get ready for a full calendar
After a relatively quiet session on Monday, the last day of trading in January presents a really rich trading calendar. About 8:00 we met data on retail sales in Germany – the decline to -0.9% m/o/m with forecasts + 0.6% certainly was not satisfactory. Further data will present our Western neighbors about 9:55 and will concern the situation on the local labor market.
In the morning, most important, however, will be data read at 11:00 – that’s when we will know the results of the forecast CPI and GDP for the euro zone sequentially for January and Q4. About 14:30 we move over the ocean to get to know a few readings from the US and most of all the results of the November Canadian GDP. On America once again we need to look at 16:00 in connection with the publication of the consumer confidence index, and finally close the calendar after 22:45 – during these hours data for labor market will supply New Zealand.