JGBs tad higher after BoJ remains muted in policy decision, sees weaker momentum in hitting 2 pct inflation target

Japanese government bonds traded tad higher Tuesday, after the Bank of Japan (BoJ) remained steady in its first monetary policy decision of this year, although striking a cautious tone over the economy’s ability to reach the 2 percent inflation goal. 

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 0.07 percent, the yield on the long-term 30-year note edged nearly 1 basis point lower at 0.82 percent and the yield on short-term 2-year traded nearly flat at -0.13 percent by 05:25 GMT.

As widely expected, the BOJ maintained a pledge to guide short-term interest rates at minus 0.1 percent and 10-year bond yields around zero percent at its two-day rate review that ended on Tuesday. It also kept intact a loose pledge to buy government bonds so its holdings increase roughly at an annual pace of 80 trillion yen ($722 billion).

In a quarterly review of its forecasts, the BOJ maintained its 1.4 percent economic growth estimate for the year beginning in April and the 0.7 percent projection for the following year. The nine-member board also kept its price forecasts that project inflation to hit 2 percent around the fiscal year ending in March 2020.

"Inflation expectations have moved sideways recently", Reuters reported, citing the BoJ in its post-conference report.

Meanwhile, the Nikkei 225 index jumped 1.20 percent to 24,100.00 by 05:30 GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -40.01 (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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