Bank of Japan likely to keep policy unchanged

The Bank of Japan is set to meet this week for its policy decision. According to a DBS Bank, the Japanese central bank is likely to stand pat on Wednesday. The BoJ is expected to focus on its quarterly economic outlook report. GDP growth is likely to have decelerated markedly in the third quarter because of disruption of the typhoon/earthquake disasters and the softening of export demand.

While core inflation, which excludes fresh good only, has picked up to 1 percent year-on-year in September from 0.8 percent in June, it was greatly driven by the volatile energy items. The April-September inflation average continued below the 1 percent mark, at 0.8 percent.

A downward revision in FY2018 growth/inflation forecasts, combined with the prospects of a consumption tax hike in FY2019 and softer global economic conditions ahead, would dissuade the BoJ from normalizing monetary policy in the next six to twelve months, added DBS Bank.

At 15:00 GMT the FxWirePro's Hourly Strength Index of Japanese Yen was neutral at -34.5126, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 19.3903. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex