According to the Bank of Japan, there is no point in easing the monetary policy at this point. The central bankers assume that the inflation rate is going to hit the target only in late 2016 – early 2017. Therefore, they say it is necessary to focus on the price trend.
In particular, if they see the price dynamics fail to come up to their expectations, this will be treated as a sign of necessary changes in the existing BOJ monetary policy. At the same time, they believe that the current low level of basic inflation is a temporary phenomenon. Therefore, the risk of going back to deflation in the national economy is low as well. The basic inflation is the very indicator the BOJ set the 2% target for, Market Leader reminds.
FOREX
Meanwhile, the Japanese Yen is still trying to recover from the long-term trend against the U.S. Dollar. More specifically, USDJPY is moving up signs of completing wave A/B of level H8. The price is developing sub-wave A/B of level H1.
On breaking above the 122.93 high, the currency pair will start a new upswing – wave A/B of level H4. If that’s the case, the price may encounter resistance at 123.25. Alternatively, if the price breaks below the 122.25 low, USDJPY will start wave A/B of Daily with support levels around 122.14, 121.90, 121.68, and 122.22.
