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

According to a recent Reuters poll, there is a higher likelihood that the Bank of Japan could ease the monetary policy further to support

BOJ December Policy Meeting

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.

ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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