By adding vague new language to its latest policy statement, the Bank of Japan i...
TOKYO - By adding vague new language to its latest policy statement, the Bank of Japan is hoping to keep unwanted sharp gains in the yen in check, without having to tap its depleted policy tool-kit or tying its hands on future monetary action.
In particular, it said “closer attention” was needed to the possibility that the economy could lose momentum to hit its 2% inflation target. “The BOJ signaled that risks are rising and that it’s ready to act if needed. But it doesn’t have any pre-set idea on when to ease,” one of the officials said on condition of anonymity.
Yen moves have always been key drivers of action for the BOJ. A former top currency diplomat, BOJ Governor Haruhiko Kuroda is skilful at jawboning markets and discouraging excessive bets on yen appreciation, people who know him say. But while the BOJ may have succeeded in keeping yen bulls at bay for now, it also has to prevent markets from pricing in an October easing too heavily and cornering it into action.
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