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Yen weakens as BoJ keeps rates on hold

Japan’s central bank maintains its ultra-loose monetary policy programme in a bid to trigger inflation.

The Bank of Japan (BoJ) left interest rates unchanged at -0.1 per cent. Japan’s central bank pledged to maintain “extremely low” interest rates and support “continuous powerful monetary easing”.

The BoJ also left the target rate on 10-year bonds at 0 per cent, despite nearly two weeks of speculation it may take more decisive steps to reduce its stimulus programme. Following the announcement, the Yen dropped by almost 1 per cent to ¥111.75 against the US Dollar. All eyes are now on the BoJ’s policy meeting minutes due to be released this Friday, 3 August.

Meanwhile, the Eurozone has released its inflation data. Economists forecast prices would have risen by 2 per cent in July, in line with the European Central Bank’s target. However, the figures showed that inflation rose by 2.1 per cent – above expectations. The data follow Germany’s Consumer Price Index released yesterday, which had slowed to a three-month low in July, according to Destatis.

Finally, the US Bureau of Economic Analysis (BEA) this afternoon will release data on core personal consumption expenditures (PCE). Analysts forecast steady growth at 2 per cent. Should PCE have risen at a faster-than-expected pace, the Dollar will rally.

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