BOJ Could Implement Further Easing as Trade War Prolongs: Reuters Poll - Forex News by FX Leaders
Bank of Japan (BOJ)

BOJ Could Implement Further Easing as Trade War Prolongs: Reuters Poll

Posted Wednesday, August 14, 2019 by
Arslan Butt • 1 min read

According to a recent Reuters poll, there is a higher likelihood that the Bank of Japan could ease the monetary policy further to support the Japanese economy. Escalating trade tensions between the US and China have weighed heavily on Japan’s export-oriented economy while the increased uncertainty in the markets are causing the Japanese yen’s value to appreciate.

The Japanese yen has already touched a seven-week high against the US dollar and as long as the trade war continues to escalate, its safe haven appeal will remain strong and drive it further up. As Japan is heavily dependent on exports, any appreciation in its currency can drive down profits from trade, creating more problems for its economy.

In such a scenario, the BOJ will have to step in and ease policies so long as external risks threaten the economy from achieving its price goal. Nearly 80% of the economists surveyed between August 2 and August 13 indicated that the central bank could implement further easing soon.

According to the economists polled, BOJ could tweak its forward guidance, allow for higher rate of fluctuation in the 10-year government bond yields, and possibly lower its already negative interest rates further to support the Japanese economy.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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