Forex Marketz Daily Forex News – Fully Markets Update
The Bank of Japan (BOJ) held its economic policy and rate decision meeting today. About one hour ago, they announced they are keeping its monetary policy the same but are cutting its core consumer inflation (CPI) numbers. They issued these CPI numbers last quarter but are adjusting lower thanks to the selloff in crude oil.
There was no surprise, when the BOJ announced they were going to continue to increase, on an annual basis, their monetary base by ¥80 trillion (about $675 billion). They are doing this by purchasing Japanese Government Bonds (JGB) and risky asset classes like mortgage bonds.
The BOJ also extended the March deadline of two loan programs geared to make commercial banks lend more money to consumers. The deadlines were extended by one year. It also increased one program by ¥3 trillion to ¥10 trillion.
BOJ Cuts its Inflation Targets
Last quarter the BOJ raised its core CPI targets, but slashed this month thanks to global oil prices. For the fiscal year of 2015/2016 they cut the target from 1.7 percent down to one percent. For the current fiscal year they cut its target to 0.9 percent from 1.2 percent. However, they increased their GDP growth forecasts. They are expecting economic growth to come in at 2.1 percent next year. This was raised from 1.5 percent. However, the GDP for this current fiscal year is expected to contract 0.5 percent from an earlier growth of 0.5 percent.
After the BOJ announcement, the benchmark Nikkei stock index was down one percent and the USD/JPY was trading around 117.80.
There was nothing new with what the BOJ said. They made no big surprise moves as they have been consistent and already acted to stabilize things. By acting things should gradually improve in the Japanese economy. Corporations are sound, as company profits are up. This should translate to higher salaries but wages will not be affected consumer prices. This is thanks to falling energy prices. This should then translate to higher consumer spending as consumers feel better. This is good news for Japan’s economy.
