Japan will continue ultra-easy monetary policy

There have been meetings and discussions about the possibility of a significant increase in inflation rates, which could potentially become a persistent issue. Many policymakers continue to emphasize the necessity of maintaining accommodative monetary policies going forward. At present, there are positive views regarding the future trend of inflation rates, and there is confidence that the need to terminate economic stimulus measures might not arise in the near future, including changes in policy.

The Bank of Japan (BoJ) consistently reiterates that its goal remains to achieve a 2% inflation rate. However, it's noted that accelerating interest rate hikes too quickly and prematurely ending the accommodative monetary policy could have more adverse economic consequences than anticipated.

Aside from discussions about interest rates, there are also talks about the potential upward adjustments in wages and prices of goods in Japan. It's believed that "an increasing number of companies are starting to consider raising wages in the upcoming fiscal year and beyond. The recent wage hikes are seen as a way for companies to pass on increased costs, as wage adjustments have been largely stagnant for nearly 30 years. As a result, wages and prices of goods might continue to rise steadily at levels unprecedented before."

The Bank of Japan (BoJ) still finds it necessary to maintain control over the Yield Curve Control (YCC) policy. However, adjustments have been made to make yields more flexible to accommodate long-term expectations of rising interest rates, the potential for continuous increases in inflation, and adjustments to economic growth. The 10-year Japanese government bond yields have surged by more than 0.6%, marking the highest level in 9 years.

Additional disclosed data indicates a slight increase in Japan's foreign reserves to $1.254 trillion. This is the first increase in three months and is primarily driven by the growth of foreign currency reserves. The total foreign reserves are divided into foreign currency reserves ($1.124 trillion), IMF reserves ($10.777 billion), SDR ($58.995 billion), gold ($53.600 billion), and other reserves ($6.026 billion).

In the previous year, Japan spent ¥6.35 trillion to intervene in the foreign exchange market to prevent the depreciation of the yen. However, the latest data reveals that the Japanese government did not engage in currency intervention during the first quarter of the year, and such interventions might not occur again in the future. Suke Sakagami, a former financial official, mentioned, "There is no need to intervene in the yen anymore because the yen can regain its strength once U.S. interest rates peak."

Techical analysis data (5H)

Resistance: 143.64, 143.95, 144.57

Support: 142.70, 142.09, 141.77

Source: Investing.com