In a surprise move analysts say is aimed at keeping market expectations for more stimulus in check, the Bank of Japan kept policy steady Friday but ditched a time frame it had set for hitting an inflation target. The bank maintained an optimistic view of the economy but flagged downside risks to the consumer price outlook, underscoring the challenge of eradicating the public’s sticky deflationary mindset.
But Kuroda did not give a clear explanation why the central bank decided not to mention the time frame at the latest meeting although he remains confident the inflation target can be reached by fiscal 2019. But the bank may have wanted to avoid the pressure for further easing if inflation is delayed again. The bank has pushed the time frame six times earlier due to lower inflation.
On the other hand, the UK economy growth slowed in the first quarter of the year by 0.1%, the slowest pace of quarterly growth since 2012. The main reason for this slowdown may be due to the dominant weakness of households with the pound falling since 2016 and the case Uncertainty dominates the companies due to Brexit.
GBPUSD dropped 0.7% against the US dollar on Thursday, as traders scrambled to bet against a May interest rate rise from the Bank of England. The Bank of England expected GDP growth of 0.3% in the first quarter.
