January Central Banks Updates - Articles - Dukascopy Bank

Fri, 29 Jan 2021 11:48:43 GMT
Source: Dukascopy Bank SA
 

It appears that no significant changes were implemented and central banks voted to maintain the existing monetary policies to support the economic recovery during the coronavirus crisis.

Canada

On Wednesday, January 20, the Bank of Canada released its Monetary Policy Report.

According to the official release: "The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week."

Fundamental analysis for USD/CAD: BOC Rate Statement

Japan

On Thursday, January 21, the Bank of Japan issued the Monetary Policy Statement. The Bank made various monetary policy decisions:

  • The Japanese policymakers decided to maintain a negative interest rate of -0.1% to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.
  • The Bank will purchase Japanese government bonds (JGBs) so that 10-year JGB yields will remain at around 0%.The purchases' amount will increase at an annual pace of about ¥80T.
  • The Bank will purchase exchnage-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at annual paces of about ¥6T and about ¥90B, respectively. As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about ¥2.2T and about ¥3.2T, respectively.

More detailed information is provided at the Japanese central bank's official website..

Initial reaction on the market:

European Union

On Thursday, January 21, the European Central Bank revealed its plans on monetary policy.

According to the official release:

  • The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively.
  • The Governing Council will continue the purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,850 billion.
  • The Governing Council will continue to provide ample liquidity through its refinancing operations. In particular, the third series of targeted longer-term refinancing operations (TLTRO III) remains an attractive source of funding for banks, supporting bank lending to firms and households.

United States

On Wednesday, January 27, the Federal Reserve issued the FOMC Statement.

The US policymakers claimed that they expected to maintain an accommodative stance of monetary policy until the maximum employment and inflation rate of 2% over the longer run would be achieved. Thus, the Federal Open Market Committee decided to keep the target range for the federal funds rate at 0 to 0.25%.

Additionally, the Committee announced the Federal Reserve would continue to increase its holdings of Treasury securities by at least $80B per month and of agency mortgage-backed securities by at least $40B per month until substantial futher progress had been made towards the Committee's maximum employment and price stability goals.

Fundamental analysis for EUR/USD: FOMC Statement


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