In the Asian session on Wednesday (March 15), USD/JPY rose, temporarily reporting 134.30, an increase of 0.10%. At the final policy meeting of Kuroda’s tenure, the BOJ kept its ultra-low interest rate policy unchanged, leaving room for options after a leadership change in April.
“The BOJ expects both short-term and long-term policy rates to remain at current or lower levels,” the BOJ said in a statement, leaving its dovish guidance on the future path of policy unchanged. The Bank of Japan downgraded its view on exports and industrial production, signaling its continued concern about the economy, but left its overall economic assessment unchanged, maintaining its view that Japan’s economy may recover.
With inflation exceeding its 2% target, the BOJ has been forced to ramp up bond purchases to defend the 0.5% ceiling on 10-year bond yields, at the cost of distorting the yield curve and creating dysfunctional bond markets.
