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BOJ holds off easing, sparks yen spike

Thursday, June 16, 2016 - 01:22

The Bank of Japan refrains from offering additional monetary stimulus despite external headwinds and anaemic inflation, sending the yen to a two-year high. As Sonia Legg reports, it's clouded an already darkening outlook for the economy.

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Japan's economy needs a little nursing at the moment. Inflation is anaemic and it's not being helped by weak global growth. But the Bank of Japan refused to administer any medicine. That made the sniffles worse - stocks tumbled to four month lows and the yen touched a two-year high against the dollar. (SOUNDBITE) (Japanese) BANK OF JAPAN GOVERNOR, HARUHIKO KURODA, SAYING: "Yen rises and heightening volatility that does not reflect economic fundamentals are undesirable. We will closely watch markets including exchange-rate moves." There weren't any interest rate moves from the Fed either, or the Bank of England. Next week's vote in Britain on EU membership dominating. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "The current mantra coming from all the central banks is that until we have the referendum vote out of the way in the UK it is very difficult to see where markets are going to go in the short term." The BOJ is still asset buying on a massive scale from previous stimulus measures. And it's left its controversial 0.1 percent negative interest rate on some reserves unchanged. But it hasn't ruled out more easing, particularly if a strong yen continues to prevent inflation returning to normal levels. The Brexit vote isn't helping there - the yen is considered a safe-haven, rising when sterling falls.

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BOJ holds off easing, sparks yen spike

Thursday, June 16, 2016 - 01:22