The Bank of Japan did not reveal to be widening up any monetary stimulus causing market expectations to further defy even for a soft global economy. The decision laid Japanese futures to swing towards bear track while Yen unexpectedly took a hike.
| As for global commodity dominant currency dollar, it lost its strength by 2% to plunge below 109 Yen |
| Nikkei share average.N225 was bearish worth 3.5% during afternoon trade session |
“The decision came as an utter surprise. I thought the BOJ would ease further today to accelerate the yen trend which had been weakening on expectations for further easing.” – Dai-ichi Life Research Institute’s chief economist, Hideo Kumano
Bank of Japan decided to maintain its pledge to increase base money ata yearlymomentum of ($732 billion (i.e. 80 trillion Yen) via rapid asset purchases. It left unchanged a 0.1% negative interest rate it applies to some of the excess reserves that financial institutions park at the BOJ (source: Reuters).
In contrary, following it tactfully, the state bank generated a loan program of 300 billion Yen yielding funds at zero interest to financial institutions of areas badly affected by tragic disaster.
On overviewing how BOJ *performed during its Qs, it cut inflation forecasts alongside pushing back the timing for hitting its 2% price target by 6 months’ time-span.
(*It had maintained its optimism that the economy will expand moderately as a trend)
INSIGHT:At the beginning of 2016, the state bank had astonished global markets with an add-on of negative rates to its massive asset-buying – a strategy believed to have been opted to prevent external headwinds from threatening the achievement of its price target. However, the decision did not bring any impressive results instead caused more worry to BOJ
UPDATE: Investors look onto howwould BOJ Governor Haruhiko Kuroda explain the policy decision at his post-meeting news conference at 06:30 GMT, today.
“I think the odds of (monetary easing) were half and half, but the most surprising point is that the markets seemed to have been surprised. The most important point is that BOJ, especially Kuroda, would like to save its weapons and power for an emergency.” – Brown Brothers Harriman’s currency analyst, Masashi Murata.