The dollar was bouncing back toward its 14-year high against a basket of major currencies on Tuesday as the yen quickly gave up some of its gains following deadly incidents in Turkey.
The BoJ maintains status quo in its monetary policy, focusing to soothing 10Y Treasury bond yield, the benchmark for long-term borrowing costs, at around zero pct and keep the overnight interest rate around -0.1%. and asset purchases program at ¥80 trillion.
The goal is to correct the excessively flat yield curve caused by its negative interest rate policy that took effect in February.
Just with our impeccable honesty, we fairly anticipated the BoJ not to do anything in today’s monetary policy, will run through why we thought so:
What should the Japanese central bank have done? Alteration in the quantum of monthly JGB purchase volumes having just adjusted the purchases of the ultra-long JGBs (more than 10 years to maturity) last week so as to be better able to control the rate curve at the long end?
Somehow that would have been even more confusing than its double-strategy of parallel volume (QE volume) and price target (yield control) is anyway. The effectiveness of the strategy is still to be confirmed at least as far as inflation is concerned,
We had explicitly mentioned in our previous article also as Donald Trump and his election victory and the Fed sig- Donald Trump and his election victory and the Fed signaling its rate path have done the BoJ’s job for it and have weakened JPY since early November. Please refer below weblink for more reading on our previous write up:
The central bank should really send a nice letter to the FOMC and Trump and thank them for their efforts allowing it to raise the outlook for the Japanese economy slightly today thanks to the weaker yen.


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