As the economic tensions start to fade into view, the Bank of Japan is looking to keep monetary policy steady next week.
The BOJ gets a sigh of relief as the U.S.-China trade war has ceased in the last couple of weeks which has affected the global economy negatively.
However, the BOJ remains wary and ready if trade tensions spark anew or renewed fears of a disorderly Brexit hit markets and cause yen spike, according to a source privy to the central bank’s tendencies.
“Global risks persist but aren’t imposing huge damage on domestic demand yet. Markets are also calm. There aren’t many factors that justify acting now.”
Moreover, the source said the BOJ would most likely take short-term rates deeper into negative territory if it were to ease monetary policy.
“The BOJ still has ammunition in stock. But there aren’t that many left,” said another source.
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