The Japanese yen has shown limited movement in recent weeks, with USD/JPY content to hover close to the 107 mark. The pair didn’t show much interest in the Bank of Japan’s rate decision late Tuesday.
Bo
J Says GDP, Inflation To Contract
As expected, on Tuesday, the Bank of Japan maintained its monetary policy, which has been ultra-accommodative. Bo
J Governor Haruhiko Kuroda didn’t mince words at a follow-up press conference, warning that “the Japanese economy has been in an extremely severe situation.” The bank left short-term rates at -0.1% and long-term rates at around zero. Economic conditions remain grim in Japan, as the global economy has faced a meltdown in the wake of the COVID-19 pandemic. Japan has been particularly vulnerable, with its economy highly dependent on its export sector. In its quarterly outlook report, the bank said that it expected GDP to contract by 4.7% and CPI to fall by 0.5% in fiscal 2020 through March 2021. However, the bank added that it expects the economy to rebound in fiscal 2021 with a gain of 3.3%.
The Bo
J has had little in the way of monetary ammunition for quite some time, and as such has stubbornly clung to its ultra-easy accommodative policy. Governor Kuroda stated in a follow-up press conference that the Bo
J could cut rates, but the vote at the meeting was 8-1 to stand pat, with only one member voting to lower rates. It appears that we can expect more of the same from the Bank of Japan, which means that the USD/JPY could stay close to the 107 level for the near future.
USD/JPY Technical
USD/JPY is currently trading at 106.75, down 0.45% on the day. The pair headed lower in the Asian session and this trend has continued in European trade.
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