Pound to Yen (GBP/JPY) Exchange Rate Gains after BoE Holds Steady on Monetary Policy

February 6, 2015 - Written by Ben Hughes

STORY LINK Pound to Yen (GBP/JPY) Exchange Rate Gains after BoE Holds Steady on Monetary Policy

Today's Pound Sterling to Yen (GBP/JPY) Exchange Rate Foreacst

The Pound to Japanese Yen exchange rate advanced on Thursday after the Bank of England announced it would keep borrowing costs steady.

The move came as no surprise to many economists—some of whom have suggested that increased borrowing costs won’t materialise until 2016. However, other economists remain hopeful that the UK may yet see higher rates in 2015. Economist Michael Saunders commented: ‘Nevertheless, the MPC may want to signal that markets have pushed the timing of the first UK rate hike too far into the future.’

In recent months, policymakers have been divided on the topic of rate hikes with hawks Martin Weale and Ian McCafferty voting in favour of immediate interest rate increases. The January minutes showed the divergence had dissolved and instead all board members were opposed to hikes. As inflation falls in many nations, several banks have taken to easing monetary policy. Although it’s unlikely another policymaker disagreement will have occurred in the February meeting, we’ll have to wait for the meeting minutes release to find out.

Meanwhile, the Bank of Japan may be recruiting a new hawkish policymaker after the Japanese government nominated 64-year old Yutaka Harada. The move was viewed as an attempt to place aggressive policymakers within the central bank in Governor Haruhiko Kuroda’s bid to implement extreme monetary stimulus measures. Economist Kyohei Morita commented: ‘Harada is regarded as a reflationist who seeks to extricate Japan from deflation by boosting the economy through bold monetary policy.’ Harada has suggested that the central bank no longer needs to continue with its 2.0% inflation goal—a view that suits in direct opposition to the central bank’s goals. Harada stated: ‘I think it’s okay even if the BOJ doesn’t achieve 2% inflation in fiscal 2015. It’s important, instead, to guide policy so that the economy can continue to grow around 2%.’

Harada is to replace former policymaker Ryuzo Miyao who had a hand in the recent monetary policy easing in October. The vote which reached 5:4 in favour of loosening was swung by Miyao. Some reputable banking institutions have praised the move for a new and more aggressive board member. Credit Suiss stated: ‘This looks like a piece of good news for those expecting additional easing actions by the BOJ. [Harada is] well known as a monetary reflationist.’ The Japanese Coincident Index and Leading Index will both be out for publication on Friday and could affect the Yen moderately.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Daily Currency Updates Japanese Yen Forecasts Pound Sterli Forecasts