BOJ Summary of Opinions: Important not to tighten monetary policy prematurely

The Bank of Japan (BOJ) published the  'Summary of Opinions' of its July meeting earlier on, with the key takeaways noted below.

“Japan's economy has picked up as a trend, although it has remained in a severe situation due to the impact of the novel coronavirus (COVID-19) at home and abroad.”

“In Japan's economy, downward pressure on consumption is likely to intensify in the short run due to the reinstatement of the state of emergency.”

“For the time being, there is a risk that economic activity will be under further downward pressure stemming from the spread of COVID-19. On the other hand, if the vaccine rollout accelerates, it could improve by more than expected.”

“Even though the year-on-year rate of change in the CPI excluding fresh food is likely to increase on the back of a rise in commodity prices, there is a long way to go to achieve the price stability target of 2 percent and maintain that level in a stable manner. Thus, it is important not to tighten monetary policy prematurely.”

Market reaction

USD/JPY is picking up bids towards 110.00 mainly due to rising US Treasury yields, although the further upside appears elusive amid cautious BOJ’s release and risk-off tone in the Asian equities.

The spot was last seen trading at 109.85, up 0.09% on the day.