- Haruhiko Kuroda, BoJ Governor
Something new and fresh from Kuroda. It was really unexpected, keeping in mind his recent speeches, when he was constantly repeating there is nothing to worry about, and the economy will reach the 2% inflation target within the planned period. This time his remarks provided a strong and long-term bearish bias for the Yen, with the currency being set to snap May's gains against a basket of other major currencies. Our projections are still speaking in favour of Yen's long-term depreciation, while technicals have reached overbought levels, as the Yen reached the 200-day SMA against the single currency and the greenback. But what is more important is the fact fresh easing from the BoJ is inevitable.
Kuroda claimed that the central bank can conduct monetary easing to boost growth and inflation even under near-zero interest rates. Amid other lessons he learned, Kuroda mentioned that economic stability cannot be achieved only by stabilizing prices and the real economy, as policymakers should focus on the financial system as well. Moreover, he claimed about the benefits of the forward guidance. While his remarks do not give a clear indication of the upcoming stimulus, they can be a first sign of a shift in governor's mood. The economy is still recovering, even despite the tax hike, however, effects of the stimulus programme are waning and the central bank should be desperate for finding new measures of stimulating growth.
© Dukascopy Bank SA