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USD/JPY Slipps Lower Today, Despite BOJ’s Kuroda Threatening to Ease Further if Necessary

Posted Monday, April 27, 2020 by
Skerdian Meta • 2 min read

The Bank of japan held its press conference earlier today, after the rate decision to keep interest rates unchanged at -0.10%. There weren’t expectations to cut rates from them today, since they already have them in negative territory, but they are using other means of the monetary policy to help the economy.

BOJ governor Kuroda said that they will ease further with no hesitation if needed, although the Yen is bullish today, with USD/JPY declining around 50 pips lower.

Comments From the BOJ Governor Haruhiko Kuroda’s Press Conference

  • BOJ will ease further without hesitation if needed
  • Japanese economy expected to remain in severe state for some time
  • Expects impact of the virus outbreak to weaken in 2H 2020
  • Risks are tilted to the downside
  • Once the virus is contained, the economy will start recovering
  • Uncertainty is high with regards to the timing on when the virus outbreak will end
  • There is no change in the BOJ’s stance to achieve 2% price target
  • Will continue with powerful monetary easing persistently
  • JGBs will be purchased without limited to maintain YCC
  • JGB purchases above ¥80 trillion is possible
  • Prices are unlikely to meet 2% target during forecast period
  • Expects monetary easing to have synergy with government’s fiscal policy
  • Price momentum has been lost for now
  • BOJ will take additional easing steps if necessary
  • Will not rule out lower rates from future policy options
  • Will keep long-term JGB target around 0% even when virus outbreak is over
  • Does not think the yen is posing problems for the Japanese economy
  • Does not think risks are high for a strong yen
  • Yen has been stable relative to the dollar

Kuroda & co. have always insisted that the price momentum is maintained in light of all their efforts, so to say that the momentum is now lost is a bit of a rare admission that things aren’t going “according to plan”. In actuality, this has been the case for many years now but the central bank has always put up a facade that there is nothing to worry about. In any case, I wouldn’t say that this is a significant shift in view, but it is more to reaffirm the current situation in the economy and to justify their recent easing measures.

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