Bank of Japan expected to hint further monetary position at upcoming meeting

Posted 24 May, 2019

Japan has unveiled the report about April changes of the national CPI. According to the released figures, the inflation in Japan rose 0.9% y-o-y, while the forecasts suggested a less significant increase of 0.4%. The March inflation results were 0.5% up y-o-y. This means that the country's Central Bank can consider upward revision of the interest rate to move it above the negative line or at least set the rate at zero lines if the inflation continues growing in Japan. Still, another scenario is also possible. It supposes that higher April figures can be related to anticipated long-lasting holidays in May, which boosted costs at hotels in Japan and overseas. As a result, inflation can slow down again in May-June.

Nevertheless, the market is striving to see the reaction of BOJ to an unexpected hike of inflation in Japan. The next monetary policy meeting of the regulator is slated for June 20. The market experts forecast that the Central Bank is unlikely to tighten its policy dramatically, though the after-meeting statements of BOJ chiefs can make a clear possible period of the monetary changes in the futures.

Following the yesterday's plunge on the global economic slowdown caused by the US-China conflict, the Japanese currency generally was generally unmoved, though with the recent economic reports it posted some marginal gains against the US dollar. 

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