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BoJ triggers strong rally in GBPJPY

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In today’s Asian trading session, The Bank of Japan said that it would not change its accommodative monetary policy. With its benchmark interest rate Ten-year government bonds yield The historic lows of 0.1% and 0% remained the same. The Bank also indicated that it “will not hesitate to increase easing when necessary” and that it “will be flexible in making large-scale bond purchases”, releasing a clear dovish signal to the market and reinforcing Governor Haruhiko Kuroda’s statement that “the December move was a technical change”. The Bank of Japan’s economic forecasts are also very positive.

The following are economic forecasts: Bank of Japan has lowered its median GDP growth.This year’s forecast and the next 1.7% and 1.1% respectively (from 1.9% earlier) respectively. The central bank expects median core inflation expectations to remain at 1.6% this year and grow moderately to 1.8% in FY2024 – which remains below the BoJ’s target. This means that it is likely that the BoJ will maintain its accommodative policy of monetary policy until there is sustainable inflation.

Chart 1: UK inflation rate. Source: Trading Economics
Chart 1: The UK Inflation Rate. Source: Trading Economics

On the other side, the most recent UK CPI Release for December



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