As expected, the Bank of Japan left its key interest rate unchanged at 0.25% at the end of its meeting this morning. It is a way to recognize the current political risks, given the uncertain outcome of the parliamentary elections at home and the upcoming elections in the US, says Commerzbank FX analyst Volkmar Baur.
JPY may start to weaken again
“The Bank of Japan also left its economic forecasts roughly the same as three months ago. Next year’s growth was revised up slightly, while inflation expectations for next year were revised down slightly as a result. from lower energy prices. The Bank of Japan still thinks rates should rise if the economy continues to grow as expected.”
“We are still waiting to hear why. They are expecting growth of around 1% and inflation of 1.9%. Other central banks would probably be happy – job done – and would simply wait to see how the economy develops, so they can react to any unforeseen tightening or easing events. It is not clear why they are pushing to raise interest rates when forecasts show that price stability will be achieved.”
“I can see this desire to raise interest rates again leading to a further rate hike in December. This would also cause the yen to strengthen in the meantime. However, I don’t think there will be any further rate hikes next year, which would “should mean that the JPY will start to weaken again.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
