Yen falls after BoJ holds policy settings

The Bank of Japan's rate-setting committee voted to keep its main instruments of monetary policy unchanged on Thursday.

Japan's central bank kept its main overnight interest rates at -0.1% and maintained its 0% target for 10-year Japanese government bond (JGB) yields, adding its net purchases of JGBs would continued at "more or less the current pace" of Y80tn a year.

Policy statement

In its policy statement the BoJ said Japan's economy was "expanding moderately", with exports on an increasing trend. Risks to the continuation of economic expansion, the Bank said, were the impact of US economic policies on global markets, the UK's departure from the EU and geopolitical risks.

Bank of Japan governor Haruhiko Kuroda: Wikimedia Commons

It voted to continue expanding its monetary base until the annual rate of consumer price inflation exceeds its target of 2% and stays above this level in a "stable manner".

"The main take-away from the press conference was that the BoJ could raise rates in anticipation of reaching the 2% inflation target, rather than after it has been achieved, if reaching the target becomes certain," said analysts at Pantheon Macroeconomics.

Market reaction

The yen fell in response to the policy decision. The US dollar climbed 0.14% against the yen to Y113.55, while the euro gained 0.16% to Y134.82.