JPY: Could Inflation Target Shift Prompt A Correction?

While the BoJ has recently recognised stabilising inflation expectations, its ambitious inflation targets continue to bias market expectations towards further easing.

Indeed our economists argue such a bias is perhaps understandable given that little time remains to achieve their FY15 goals – especially considering actual inflation risks is returning to negative territory.

With governor Kuroda already recognising oil prices as a possible reason for delaying policy targets, confirmation of a shift in stance could weigh upon USD/JPY.

Having taken profit on our long USD/JPY position this week, we too prefer to ‘wait and see’ if policymakers indeed move for an extension.


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