Dollar climbs to lower 111 yen zone on BOJ easing expectations

Haruhiko Kuroda Bank of Japan Governor. Kuroda is also expected to strike a dovish tone at Tuesday's BoJ meeting Wikimedia Commons

With inflation still far from 2% goal, the board is not in a position yet to debate the timing of an exit from ultra-easy monetary policy, Kuroda said at the press conference post-BOJ meeting.

Asian stocks advanced on Tuesday (Jan 23) after U.S. senators struck a deal to end a three-day government shutdown, sending Wall Street's main indexes to record highs, while the USA dollar inched down against the yen after the Bank of Japan kept policy steady.

"Inflation expectations are moving sideways recently", the BOJ said in a quarterly report, offering a more optimistic view than three months ago when it said they were moving on a weak note.

In currencies, the dollar briefly dipped 0.33 per cent to 110.550 yen before pulling back to 110.815 for a loss of 0.1 per cent.

Soft inflation expectations, or public perception of future price rises, have hampered the BOJ's efforts to use its huge money printing to eradicate Japan's sticky deflationary mindset and nudge households into boosting spending.

"There is absolutely no need to adjust our yield targets just because we revised up our assessment on inflation expectations". According to BoJ, the economy will continue growing at a pace above its potential, mainly through fiscal 2018.

The euro was up 0.3 percent against the greenback at $1.2257, with traders focused on upcoming central bank meetings.

S. levels, after Kuroda reiterated his commitment to strong monetary easing.

The Japan economy is forecast to continue its moderate expansion, the bank said.

Still, the central bank was nowhere near its peers who were looking for ways out of unconventional monetary policies.

All of this suggests that the BOJ's actions could become a source of volatility for investors this year and also lead to a pickup in trading activity.

Such brightening global growth prospects pose fresh communication challenges for policymakers.

He also said wage hikes were crucial for inflation to hit the BOJ's target, and that there were promising signs firms were finally ready to pass on their record profits to employees. Consumer prices in the US, excluding energy and food prices, rose 1.8% in December compared with a year earlier.

The BOJ caused ripples in the markets earlier in January by slightly reducing the amount of longer-dated Japanese government bonds (JGBs) it buys from the market at its regular debt-purchasing operations.

That's because inflation, excluding energy prices, is weaker than even the 0.9 percent registered by the core gauge in November, the people said.

"The BOJ is on hold for the first half of this year but could start to shift gear in the second half of this year".

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