The Bank of Japan kept its monetary policy unchanged on Tuesday but added a new tone in its monetary policy statement by saying it would resort to easing "without hesitation" if the economy loses momentum to achieve the central bank's inflation target of 2 percent.
As expected, the BOJ kept its short-term interest rate at -0.1 percent, and pledged to direct the yield on 10-year government bonds at around zero percent.
According to BOJ Governor Haruhiko Kuroda after the decision made by the BOJ that “Today, we went a step forward by saying we’ll take additional easing steps without hesitation if there is a risk the economy will lose momentum for hitting our price target,”
The yen did not change much during the day as the Japanese currency dropped 0.17 percent to 108.58 against the dollar, while before the Central Bank decision the yen fell to a three-week low of 108.95.
The Japanese currency trimmed its losses and rose morning against the dollar after the BOJ's decision, but the move quickly faded.
Versus the British pound, the yen strengthened to 131.61, the highest level since November 2016, while currently hovering around 132.25.
The Bank has maintained its future guidance on future monetary policy that is required to maintain current very low interest rates for an extended period of time, at least until spring 2020."
Seven members of the Bank's Board voted in favor of the decision to maintain interest targets, two voted no and two abstained.
In the meantime, the dollar index, which measures the performance of six major currencies, rose about 0.06 percent to 97.857, amidst expectations of an interest rate cut on Wednesday.
Later in the day, the U.S. will release personal
spending and income data, as well as consumer confidence data later in the day.