The Japanese yen was rising at the start of today’s trading session, but lost its gains as the Bank of Japan boosted its stimulating measures, confirming expectations that the central bank will conduct more aggressive policy with the new government.
The BoJ kept its main interest rate near 0–0.1 percent and expanded its asset purchase program by ¥10 trillion to ¥101 trillion. The bank noted that “overseas economies remain in a deceleration phase” and “there remains a high degree of uncertainty concerning Japan’s economy”. As a result, the BoJ concluded:
Based on these economic and price developments, the Bank of Japan judged it appropriate to undertake further aggressive monetary easing policies in order to prevent Japan’s economy from deviating from the path of returning to a sustainable growth path with price stability.
An aggressive policy was expected after Shinzo Abe had become new Prime Minister. Yet the central bank did not change its inflation target, frustrating experts who expected it to double from 1 percent to 2 percent. The BoJ suggested that it will review the target on the next policy meeting.
USD/JPY traded at 84.33 as of 22:18 GMT today after falling from 84.39 to 83.84. EUR/JPY bounced to 111.75 following the drop from 111.62 to 110.70. GBP/JPY went down from 137.09 to 136.19, but rebounded to 137.31 later.
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