How BoJ's Easy Policy Impacts USDJPY

London: 8 August 2023 (TraderMade): The Bank of Japan takes note of inflation. Though it is much lower in Japan than in other economies, the BoJ aims to bring it under its target 2% inflation rate. The financial experts, therefore, speculate that the BoJ may need to tighten economic policy shortly.

USDJPY traded at 138.08 on 13 July and raised to 143.32 on 2 August. The upward trend may continue as the BoJ has released its Summary of Opinions in the August first week.

The members emphasize keeping an easy economic policy in place. The members also understand the possibility of an increase in inflation and wages.

BoJ was also advised to keep the Yield Curve Control (YCC) more flexible. Thus, experts observe that the policymakers consider the inflation rate, which is above the targeted 2% mark, may be sustainable. Financial experts call the Summary of Opinions mixed.

The movement of JPY in the Forex market reflects Japan's wage data released in June and BoJ's continuation to keep negative interest rates to fight inflation and better growth.

The BoJ officials believe that an inflation rate of 2% in a stable manner is realistic and achievable with the current policy decisions.