BoJ’s Monetary Policy Decisions Hurt The Yen

October 31, 2023 23:21

The Bank of Japan (BoJ) announced that it would keep interest rates on hold while disappointing market participants for not increasing the 10-year JGB yield ceiling from 1% to 1.25%. As a result, the Japanese yen came under pressure, losing ground against the US dollar.

A Eurostat report regarding the euro bloc showed that the annual Core HICP inflation fell to 4.2% in October as expected, while the real GDP expanded at an annual rate of 0.1% in Q3 2023.

In other news, BP, one of the top oil producing companies in the world, announced a steep year-on-year fall in profits, missing analyst estimates.  BP’s accompanying report suggested that OPEC’s production restrictions and an expected rebound in demand could support oil prices.

BoJ Interest Rate Decision

The Bank of Japan kept borrowing costs unchanged as it was expected but changed the language used to describe the upper bound of the 10-year Japanese government bond yield. The Japanese central bank post meeting statement noted that “the Bank will maintain the target level of 10-year Japanese government bond (JGB) yields at around zero percent, it will conduct yield curve control with the upper bound of 1.0% for these yields as a reference.”

In his remarks, the BoJ’s Governor Kazuo Ueda said that he would scrutinize the effect of the government’s policy on inflation outlook once it is announced. Ueda noted that “until we have the achievement of the inflation target in sight, both YCC and negative interest rate policy will be in place.”

German GDP Falls In Q3 2023

The German Federal Statistics Office (Destatis) published a report showing that the country’s GDP shrank by 0.1% on a quarterly basis in the third quarter of the year. Destatis’ analysts noted that the GDP’s growth in Q2 2023 has been revised to 0.1% from 0% mentioned in its previous report.

The announced negative growth figure brings the German economy just one step before recession. ING analysts stressed that “what’s even worse is that the economy currently remains hardly above its pre-pandemic level more than three years later. These data alone underline that the German economy has at least become one of the growth laggards of the eurozone.”

ECB’s Kazimir: “Have To Stay At The Peak For Next Quarters”

European Central Bank (ECB) Governing Council member Peter Kazimir shot down hopes for rate cuts implemented by euro bloc’s central bank. In his remarks, Kazimir noted that “voices coining end of rate hike cycle ‘should hold their horses’, it’s too soon to declare victory and say the job’s done. Upside inflation risks have yet to dissipate entirely, we must stay vigilant. Additional tightening could come if incoming data force us.” 

The ECB’s board member reiterated that December’s inflation data as well as March’s could act as milestones regarding the bank’s monetary policy.

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Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.