TOKYO (AFX-ASIA) - HSBC senior economist Peter Morgan said today's move by the Bank of Japan not only "marks a return to the zero interest rate policy" but also the effective setting of an inflation target. "This ... marks a new departure in BoJ policy, somewhat beyond market expectations," he said.
"The BoJ ... said that it would continue the new stance until the CPI inflation rate stabilised at above zero, meaning that it has adopted an inflation target," Morgan said.
"The BoJ does not seem to have set a deadline for reaching zero inflation and, in that sense, the shift of policy may be less far-reaching than it suggests," he said. "Nonetheless, the implications should be positive for the bond market and negative for the yen."