The YEN has weakened during the night after the last policy meeting of the BOJ. This has helped raise the USD/JPY above 144.50 as the Tar moves beyond the minimum of 139.89 established on April 22. This follows the Boj’s decision to maintain the policy rate without changes at 0.50%, while updated economic projections and risk assessment indicated more caution on the delivery of more rates of rates, reports MUFG FX analyst Lee Hardman.
The BOJ cuts the forecasts of GDP and inflation
“The first updated economic projections of the BOJ from the announcement of tariffs of the ‘Liberation Day’ of President Trump revealed that the growth forecast of GDP in Japan for the current fiscal year was reviewed downward by 0.6 percentage points to 0.5% and for the next fiscal year by 0.3 percentage points to 0.7% before the growth is expected to increase to 1.0% in the fiscal year 2027 Updated BOJ projections for underlying inflation (excluding fresh food) were checked down at 0.2 percentage points to 2.2% for the current fiscal year and 0.3 percentage points for the next fiscal year, after which it is expected to be close to the objective of the BOJ in 1.9% in fiscal year 2027. This supports the Boj’s decision to maintain the guide that ‘the policy interest will continue of monetary accommodation ‘If your growth and inflation perspective materializes. “
“While the BOJ continues to point out that the more rates will probably rise, now judges that the risks are biased down both for growth and inflation for the current fiscal year and the following. The BOJ emphasized that it faces uncertainties” extremely high “in the future. In the deputy press conference, the Governor UDA declared that he hoped that the improvement of the price trend was temporarily stopped He judged that the probability that his economic perspective materializes is not as high as before.
“Updated economic projections and risk assessment have further encouraged market participants to delay expectations on the time of the next rise in the box until the end of this year as very soon. There are currently around 10 basic points of discounted uploads by the end of the year. A rapid commercial agreement between Japan and US The economy of Japan directly, although the BOJ would probably continue to be concerned about the downward risks for growth outside Japan, establishing a higher obstacle for the BOJ to resume the rates of rates this year. Important Central Banks, including Fed, cut even more rates, which results in performance differentials continue to narrow between Japan and abroad. “
Source: Fx Street
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