31 July 2018 ( Lagos )After weeks of speculation that the Bank of Japan may begin to adjust its stimulus program, the central bank once again decided not to join the global trend towards tighter policies.

The BoJ left its overnight interest rates unchanged at -0.1% and reiterated that it would resume buying Japanese Government Bonds to keep the 10-year yields around 0%. The bank may allow for more flexible movement on the 10-year bonds, however, this isn’t considered a significant shift in policy. The BoJ also made tweaks to its ETF purchases, as it increased the composition of TOPIX-linked ETFs while shifting slightly away from the Nikkei 225 Index but maintained its annual pace of ETF buying.

It seems the Bank of Japan will be the last major central bank to pull the trigger on tightening policy as the Japanese economy continues to struggle with stubbornly low inflation levels. This should allow further widening in spreads between Japan’s bonds and other global bonds towards year-end, suggesting that the Yen is likely to remain under pressure for the near future.

Source: Hussein Sayed, Chief Market Strategist at FXTM

Reporting for EasyKobo on Tuesday, 31 July 2018 in Lagos, Nigeria