Hong Kong
CNN
—
The yen plunged Wednesday after the Bank of Japan decided to keep its ultra-accommodative monetary policy, defying market hopes that higher inflation could force the central bank to move away from low interest rates. .
The Bank of Japan did not change its yield curve control (YCC) target as it ended its two-day policy meeting on Wednesday. Short-term rates were at an ultra-dovish minus 0.1%, and 10-year Japanese government bond (JGB) yields hovered around 0%.
The YCC policy is a pillar of the central bank’s efforts to keep interest rates low and stimulate the economy.
“Japan’s economy is picking up as economic activity resumes and public health is protected from the novel coronavirus, despite the impact of soaring commodity prices and other factors,” the Bank of Japan said. Said In its quarterly outlook report, it added that a slowdown in overseas economies could put downward pressure on growth.
Immediately after the announcement, the Japanese yen plunged against the US dollar. Last time, the dollar was 131.34 yen, down 2.5%. Against the US dollar last Friday, he hit a seven-month high of 127.46.
Last month, the Bank of Japan shocked global markets by allowing the 10-year JGB yield to move 50 basis points either side of its 0% target. rate will increase further.
The unexpected hawkish decision sent stocks lower and yields on the yen and bonds soaring.
