BOJ Slaps Fitch In The Face…

(JP) Japan BOJ Gov Shirakawa post rate decision press conference noted that the central bank had no change to its stance of pursuing powerful easing. He added that he saw big demerits to further rate cuts including cutting the 0.5% interest paid to excess reserves and needed to measure effects of easing by interest rates and not by size of monetary base. He did not see immediate risk of BOJ failing to meet asset purchase target. The tail risk regarding European debt woes was at forefront in his opinion. 


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  • Keeps economic assessment unchanged
  • Maintains asset purchase fund at ¥70T

What does this mean?

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BOJ answered Fitch Rating’s downgrade of its Sovereign Credit Cut by stating that “(Fitch) needed to measure effects of easing by interest rates and not by the size of monetary base”, in essence, making commitments to further its easing policy while asserting the central banks independence to credit rating agencies’ influences.

This is definitely going to add further demand for JPY as BOJ is missing the point by getting into a pissing match with Fitch.  I believe unless the situation in Europe changes or BOJ decides to intervene, JPY will remain strong.


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