19 March 2001, 12:45 BoJ sets de facto inflation target; positive for bonds, negative for yen: HSBC
TOKYO (AFX-ASIA) - HSBC senior economist Peter Morgan said today's
move by the Bank of Japan not only "marks a return to the zero interest
rate policy" but also the effective setting of an inflation target.
"This ... marks a new departure in BoJ policy, somewhat beyond
market expectations," he said.
"The BoJ ... said that it would continue the new stance until the
CPI inflation rate stabilised at above zero, meaning that it has
adopted an inflation target," Morgan said.
"The BoJ does not seem to have set a deadline for reaching zero
inflation and, in that sense, the shift of policy may be less
far-reaching than it suggests," he said.
"Nonetheless, the implications should be positive for the bond
market and negative for the yen."
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