Policy rates kept unchanged by Bank of Japan & US FED

US Fed in Wednesday's meet kept interest rates unchanged while citing contradiction in the economy. While the job creation is happening at a good pace along with improving housing markets in US, there remain concerns on slowing business investments and exports. Dow Jones ended up in green after a volatile session on Wednesday April 27.

Bank of Japan (BOJ) unexpectedly kept the policy rates unchanged leading to volatile price movement in Yen and Nikkei futures. BOJ while maintaining the deposit rates at  negative 0.1 percent, said it will provide loans at zero interest rates to those companies affected by the recent earthquakes in Japan. BOJ's decision has surprised market players as further easing of interest rate was expected taking into consideration the problems faced by the economy. Due to policy announcement of BOJ the Yen has strengthened and Nikkei future is trading down by almost 3 percent on an intra day basis on Thursday. The dollar/Yen currency pair is down by almost 2 per cent. 

BOJ has also revised the GDP growth estimates  downwards from 1.5 percent to 1.2 percent for 2016-17. While market players are disappointed with the BOJ announcement there is strong consensus building amongst the market players regarding  monetary easing by BOJ in the month of July when the next BOJ meet happens. The current BOJ meet happened against a backdrop of rallying Yen currency , year to date losses of Nikkei and a slowing economy due to series of earthquakes in southern Japan. An upcoming election in Upper House in Japan is also said to have influenced the policy decision by BOJ which needs to take some critically important policy decisions to revive economic growth.