The yen fell sharply against the US dollar immediately after the Bank of Japan announced its aggressive monetary easing on 4th April, while equity markets surged. Equities have continued to rise over the past couple of weeks but the slide in the yen appears to have paused just short of the 100 mark. Despite the BoJ’s plans to double the size of Japan’s monetary base by increasing its purchases of JGBs, government bond yields have actually jumped over the past month. Meanwhile the size of the challenge facing the central bank to lift inflation to 2% within roughly two years was underlined by the latest CPI data, which show prices still falling in y/y terms. Recent survey data have been more upbeat than the hard numbers, which show economic activity remains relatively soft.
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