BoJ: No news from Tokyo – Commerzbank
|As expected, the Bank of Japan left its key interest rate unchanged at 0.25% at the end of its meeting this morning. It's a way of acknowledging the current political risks, given the uncertain outcome of the parliamentary elections at home and the upcoming US elections, Commerzbank’s FX analyst Volkmar Baur notes.
JPY may start to weaken again
“The Bank of Japan also left its economic forecasts pretty much the same as they were three months ago. Next year's growth was revised up a little, while inflation expectations for the coming year were revised down a little in the wake of lower energy prices. The Bank of Japan still thinks rates should go up if the economy keeps growing as expected.”
“We're still waiting to hear why. They're expecting growth of around 1% and inflation of 1.9%. Other central banks would probably be happy – job done – and would simply wait and see how the economy develops, in order to be able to react to any unforeseen events by tightening or loosening. It's not clear why they're pushing to raise interest rates when the forecasts show that price stability will be achieved.”
“I can see this desire to raise interest rates again leading to a further interest rate hike in December. This would also make the yen stronger in the meantime. I don't think there'll be any more interest rate hikes next year though, which should mean the JPY will start to weaken again.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.