Can Bank of Japan curb yen's appreciation?

The Bank of Japan (BoJ) will wrap up its two-day policy meeting on Wednesday, 21st Sept and markets wait to see what more (if anything) it can do to stimulate its economy. Another rate cut cannot be ruled out, but with rates already negative the focus may be on other measures. 

The Bank of Japan had promised a comprehensive assessment of its monetary policy for this Wednesday’s meeting. The review is charged with looking at how best the BoJ can stimulate growth and raise inflation. Economic growth remains weak, and policy makers are split on the optimal mix of stimulus programs.

The BOJ's massive "quantitative and qualitative easing" (QQE) has failed to push up inflation.  Neither the negative interest rates nor the massive bond purchases have caused inflation to notably approach its 2 percent target. Market participants realised this a long time ago and as a result inflation expectations have collapsed at the start of the year and JPY appreciated notably.

"If the BoJ wants to increase price pressure in a sustainable manner and weaken the yen, it will have to come up with something new. But it does not seem to be willing to do that yet and we therefore see a risk that JPY appreciation will accelerate following Wednesday’s meeting." said Commerzbank in a report.