The Bank of Japan Maintained its Loose Setting & Trimmed the Inflation Outlook

The BoJ Kept it Loose Stance

The Bank of Japan on Tuesday decided to stick its ultra-dovish stance, since it kept rates at -0.1%, while maintaining its Quantitative and Qualitative Easing (QQE) and the yield curve control (YCC). Policymakers reiterated their commitment to "patiently" carry on with the loose monetary setting in order to achieve the 2% inflation target in a "sustainable and stable manner", together with "wage increases". [1]

Battling with decades of deflation and entrenched expectations that pay will not increase easily, officials are hesitant to change tack. Inflation ex fresh food has been decelerating over recent months, after the multi-decade peak around a year ago. In fact, officials raised their inflation forecasts in today's updated outlook. CPI ex-fresh food is now projected at a median of 2.4% for Fiscal 2024 (year starting in April), from 2.8% in the October forecasts [2]. The lower outlook raises the bar for policy normalization.

On the other hand, the Consumer Price Index (ex fresh food) has stayed above the 2% target for twenty-one consecutive months and the bank appears convinced it will achieve price stability. Underlying inflation is expected to "increase gradually" towards this goal, while the likelihood of such outcome "has continued to gradually rise".

The central bank has already taken steps towards normalization, as it had further loosened its grip on the yield curve in October and has hinted towards an eventual exit from negative rates. Markets believe that it will pivot this year, but there is less certainty around the timing. Given the importance of the wage component, it seems reasonable for policymakers to wait at least until the result of the annual spring wage negotiations.

Trade the News: View our Economic Calendar

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



Retrieved 23 Jan 2024


Retrieved 14 Jun 2024

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.