JPY strengthened against most of its major rivals in the European session on Tuesday as the Bank of Japan (BoJ) hinted at the exit from its super-easy policy stance.
At its January meeting, the Japanese central bank decided to maintain its ultra-loose monetary policy stance, leaving its short-term policy interest rate unchanged at -0.1%. The BoJ emphasised that it will patiently continue with monetary easing, aiming to achieve the price stability target of 2% sustainably and stably. In addition, the Bank lowered its fiscal 2024 core inflation forecast to 2.4% from 2.8% projected in October but marginally raised its fiscal 2025 core inflation prediction to 1.8% from 1.7%.
The BoJ, however, noted that underlying inflation is likely to increase gradually toward achieving its target, as the output gap turns positive and as medium- to long-term inflation expectations and wage growth rise.