The Japanese yen jumped today after the central bank maintained its extremely accommodative monetary policy, but boosted growth forecasts and signaled that inflation may reach the target next year.
The Bank of Japan kept interest rates near zero and the size of annual asset purchases at ¥60–70 trillion. The central bank increased expected growth of gross domestic product in 2014 to 1.5 percent up from the previous prediction of 1.3 percent. The projection for inflation stayed at 3.3 percent, far above the bank’s target of 2 percent.
The BoJ outlook was not without its negative sides. The central bank mentioned that “considerable uncertainty surrounds developments in medium- to long-term inflation expectations” and said that “there is no sign at this point of excessively bullish expectations in asset markets or in the activities of financial institutions”.
USD/JPY dropped from 98.48 to 98.32 as of 20:19 GMT today, while its daily low was at 98.08. EUR/JPY sank from 135.29 to 133.54. GBP/JPY was at 157.67 after dropping from 157.96 to 157.26 intraday.
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