Japanese Yen Gains After Inflation Data, BoJ Monetary Policy Decision

The Japanese yen gained against other most-traded currencies after today’s release of inflation data and yesterday’s monetary policy decision of Japan’s central bank. The gains were limited, though, as markets are feeling the holiday mood and trading is slowing.
The Statistics Bureau of Japan reported that the national core (excluding food) Consumer Price Index rose by 0.5% in November, year-on-year, accelerating from the previous month’s 0.4% rate of growth and matching expectations. Month-on-month, the core CPI rose by 0.2%. Inflation was still far from the central bank’s target of 2%.
The Bank of Japan decided yesterday to leave monetary policy unchanged, as was widely expected. The main interest rate remained at -0.1% and the annual size of asset purchases at Â¥80 trillion. The central bank continued to predict moderate growth of the Japanese economy:

With regard to the outlook, Japan’s economy is likely to continue on a moderate expanding trend, as the impact of the slowdown in overseas economies on domestic demand is expected to be limited, although the economy is likely to continue to be affected by the slowdown for the time being.

Japan’s government approved on Friday a record budget spending equal to $939 billion for the next fiscal year. The increased spending should boost the country’s economic growth.
USD/JPY slipped from 109.36 to 109.28 as of 7:20 GMT today. EUR/JPY fell from 121.61 to 121.47. CHF/JPY dropped from 111.76 to 111.63.

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