USDJPY has been rising for the second consecutive trading session; the Bank of Japan is not ready to act aggressively.
The Japanese Yen is retreating against the USD on Tuesday. The current quote for the instrument is 114.54.
During its January meeting that ended earlier today, the Bank of Japan left its monetary policy intact. The benchmark interest rate remained at -0.1%. In the comments, the BoJ Governor said that the regulator would revise its policy without hesitation if necessary. So far, there are no premises for changing the current ultra-soft monetary policy. It’s a classic comment from the Japanese regulator, which is repeated in one way or another every meeting.
This time, the BoJ said that it didn’t consider raising the rate because the current price surge was based on temporary factors. The regulator believes that there are no reasons right now that will make inflation rise to its target of 2.0%.
It’s a pity because the scenario with a rate hike prior to the inflation boost might be quite positive, at least on paper.
It’s quite interesting that the Bank of Japan, being extremely conservative in its monetary policy, announced a revision of inflation forecasts. For example, the median forecast for the Japanese CPI in 2022 implies +1.1% instead of 0.9% before. in 2023, inflation is expected to add 1.1% against the previous estimate of 1.0%.
After the Bank of Japan confirmed that it wouldn’t raise the rate, the Yen retreated against the USD.
