Investing.com – Following the Japanese Monetary Authority’s decision to keep interest rates at 0.10% after previously abandoning ultra-loose negative interest rate policies, the perception is that the yen will weaken later than expected as bond purchases end later than expected. Julius Baer noted this in a note on Friday. The projection assumes a devaluation from the current 157.46 to 160.
“Bond purchases will now be gradually phased out and will only start in July. The end of bond purchases later than expected and unchanged interest rates disappointed and weakened the yen,” the Swiss group said.
David Kohl, chief economist at Julius Baer, said details on how bond purchases will be phased out were not expected until the next meeting, which would have disappointed investors.
“A tightening of policy at the next meeting is now very likely, but will most likely be implemented cautiously,” added Kohl, who expects a 10 basis point rate hike in July.
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