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Forex pairs in this Article » USD/JPY (Barcelona) - The BOJ left policy unchanged today as widely expected, notes Yujiro Goto, FX Strategist at Nomura.

Key Quotes

"The Bank upgraded its economic growth forecast for FY14 from 1.3% to 1.5%, significantly higher than private forecasters‟ expectations. The Bank also kept its optimistic inflation forecast, expecting inflation to reach 1.9% in FY15."

"The BOJ's updated forecast suggests that the Bank is still confident about the Japanese economic and inflation outlook. Thus, the likelihood of a near-term easing is limited."

"At the same time, the likelihood of additional easing next year remains, in our view. BOJ Governor Kuroda today said inflation could reach 1% by the end of this fiscal year. Inflation has been gradually rising in Japan, but we expect the pace of the increase in inflation to slow mainly due to energy price developments."

"There are diverging views on inflation forecasts even among board members, and downside risks for the BOJ‟s inflation forecast are clearly bigger than upside risks, in our view"

"With a still optimistic inflation forecast, the BOJ is unlikely to deliver positive surprises in the near future. However, we view the current policy stance as still negative for JPY in the medium term."
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