JGBs climb after BoJ drops time-frame for achieving 2 pct inflation goal in its quarterly outlook report

The Japanese government bonds climbed during late Asian session Friday after the Bank of Japan (BoJ) dropped the expected time-frame for reaching the 2 percent inflation target in its quarterly outlook report released early today. Also, the central bank remained on hold at today’s monetary policy meeting, keeping the short-term interest rate target unchanged at -0.10 percent and 10-year yield target at around zero percent.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped nearly 1 basis point to 0.05 percent, the yield on the long-term 30-year note fell nearly 1-1/2 basis points to 0.74 percent and the yield on short-term 2-year traded tad lower at -0.13 percent by 04:25 GMT.

The central bank has removed previous wording on reaching 2 percent inflation around FY2019, while leaving its inflation forecasts largely unchanged. The change underscores just how much more time will be needed to reach its 2 percent target, even as other major central banks move further down the road to policy normalization, Bloomberg reported.

Further, in the latest quarterly outlook report released by the BoJ, the central bank noted that the economy is "likely to continue growing at a pace above its potential in fiscal 2018". For 2019 and 2020, "the economy is expected to continue on an expanding trend supported by external demand". Ex-fresh food CPI continued to show "relatively weak developments" when excluding the effects of energy prices.

Meanwhile, the Nikkei 225 index traded 0.56 percent higher at 22,444.00 by 04:30 GMT, while at 04:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -29.80 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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