Next Friday (July 28), we await the BoJ's interest rate decision. However, this event does not seem to surprise the market, as earlier this week, BoJ Governor Kazuo Ueda communicated that the Bank would maintain its ultra-tight monetary policy
As Reuters reported, the BoJ was due to deliberate this month on changes to the operation of the YCC (yield curve control programme). When asked about this, Ueada said that as long as everything pointed to a return to the 2% inflation target, the BoJ would not change its monetary policy.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appA weak yen may boost profits for Japanese exporters, but it raises the price of energy and other yen imports for businesses and consumers. Despite rising inflationary pressures, Japan is trying to stimulate the economy in the face of broad market uncertainty, Ueda added.
In the long term, however, this situation may change. The Japanese government today lowered its economic growth forecast for the current fiscal year and raised its inflation outlook. The proximity of these updates to the BoJ's next meeting raises heightened curiosity, but nevertheless the chances of actual monetary changes (if any) do not appear to be warranted anytime soon. In this regard, tomorrow's CPI data for June (00:30 am BST) may tell us a little more.
- GDP growth forecast for 2023/24 at 1.3% (previously 1.5% in January)
- Growth forecast for 2024/25 financial year at 1.2%
- Inflation forecast for 2023/24 at 2.6% (previously 1.7%)
- Inflation forecast for 2024/25 at 1.9%
The USDJPY pair is currently testing the psychological 140 zone. In the short term, the most important support and resistance zones to watch will be the previously mentioned 140 zone and the 50-day EMA (blue curve) and the zone of recent local minima (green zone). Source: xStation 5
