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Monetary Policy and Inflation

Bank of Japan Backs Away From Fed-Style Forward Guidance, Undermining Inflation Goal

Monetary policy moves by the Bank of Japan (BoJ) this week were far from adequate to really loosen the current policy stance, particularly vis-à-vis other DM central banks like the Fed. However, the action taken—the expansion of the asset purchase program, coupled with a rather inconsequential new lending program—was largely in line with market expectations and prevented a punishing spike in the value of the yen that probably would have ensued had these expectations not been met.

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