BOJ in line with major Central Banks


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By: Ahura Chalki

A week ago, after FOMC monetary policy and while members unanimously hold the current rate of 0-25%, Fed chair, Powell in his press conference mentioned that rates will remain in the same level of near-zero, at least until the end of 2022.

We saw the same policy of holding the rates at the latest changes for almost all major central banks, in late May and the first half of June monetary policy meetings.

For BOJ, as it was widely expected, in yesterday’s MPM, with 8 votes against “Goshi Kataoka” vote, (Asian Review) which was not agreed by holding policy, kept the current policy with no change in the interest rates (-0.10%), while Chairman Kuroda’s news conference was conferring that at least in details, some changes we have to see when he mentioned that “We are prepared for an extended campaign to help prevent businesses from running out of cash and to keep the financial markets stable. Issuance of corporate bonds and commercial paper remains at an elevated level. It is important to keep borrowing costs low.”

More support of Small and medium-size businesses and possible interference in financial markets, especially in the FX market are expecting to see more in the coming months, from BOJ.

Market reaction:

Nikkei 225 had a positive reaction and gained 4.9% yesterday, while Yen didn’t pay attention, however, today Japan’s Nikkei eased 0.5%, after jumping almost 5% on Tuesday for its biggest daily gain in three months.

In the near term, current policies can help the market, but for the longer-term, it is not just about the internal market. Japanese GDP is depended so much on technology and electronic products export, which means the global market needs to be boosted to see the future gains in Tokyo’s’ stock markets.

About the Yen, since it is acting as safe-haven, any future changes depend on Virus front, while we should keep an eye on tensions between South and North Korea, higher tensions will affect negatively in both Stock and FX markets in Japan.

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