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.