Orbex Market Flash

Kuroda Says Low Rates Here To Stay Until Inflation Rises

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There has been a growing level of speculation over recent months that the Bank of Japan is on the verge of a shift in policy. Stronger economic data, amidst the backdrop of growing hawkishness in G10 central bank, has seen many players questioning whether we will soon see the beginning of the end for the BOJ’s ultra-loose monetary policy.

Indeed, this view was brought into sharper focus over the summer when the BOJ announced that it was lifting the upper limit on its yield curve control target range from 0% – 0.1% to 0% – 0.2%.


Many players took this as the bank laying the foundations for a more formal tightening. However, Kuroda was keen to quell this speculation at the time saying that the BOJ would keep rates at current low levels for a very long time to come and that this alteration to YCC was intended to add more volatility into the JGB market and was not a precursor to tightening.

BOJ Downplays Tightening Speculation

Since then, bulls have been steadily disappointed as the BOJ has neither made further changes to its operations nor given any other signals that a shift in policy is on the horizon beyond some upward revisions to growth and inflation.

However, the BOJ chief has recently been more vocal on acknowledging the risks around keeping rates low for too long, again leading to speculation on a shifting policy.

Nevertheless, speaking earlier this week, the BOJ chief reaffirmed the bank’s message once again saying that there was a chance of the BOJ reversing its negative interest rates in the near-term as they remain necessary for boosting inflation back up to its 2% target.

Kuroda Acknowledges Risks

Regarding the risks around rates being low he said:

“I know there is various debate on the BOJ’s negative rate policy… but for the time being, it’s a necessary step that is part of our large-scale monetary easing program.”

However, Kuroda did say that the current policy approach was enough and there was no need for further stimulus. On this matter, Kuroda said:

 “there’s no need to take additional steps. What’s important is to ensure our policy is sustainable, with an eye on balancing its pros and cons”.

Technical Perspective


USDJPY continues to trade within the bullish channel which has framed price action over the last year and is currently sitting right on the supporting trend line. The major level to break to the upside remains the 114.58 level which has been a key resistance level over recent years and withstood several attempts. If price can breach this level, the next key structural resistance is all the way up at 118.69.



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