Japan Market gains after BoJ maintains policy rate unchanged

Headline shares of the Japan share market closed higher on Tuesday, 30 July 2019, as risk appetite buying propelled by a weaker yen against greenback and after the Bank of Japan kept its ultra-low interest rates unchanged but signalled for ease "without hesitation" if the economy loses momentum. Total 26 subsectors out of 33 subsectors of the Topix's index inclined, with Electric Power & Gas, Electric Appliances, Warehousing & Harbor Transportation Services, Fishery, Agriculture & Forestry, and Foods issues being notable gainers, while Other Financial Business, Information & Communication, Pulp & Paper, and Oil & Coal Products issues were notable losers. At closing bell, the 225-issue Nikkei Stock Average advanced 92.51 points, or 0.43%, to 21,709.31, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange rose 7.01 points, or 0.45%, at 1,575.58.

The Bank of Japan kept monetary policy steady on Tuesday but said in its policy statement that it will not hesitate to take additional easing measures if the economy loses momentum toward achieving the target interest rate of 2%.

The moves came after the European Central Bank last week signaled a potential rate cut and more monetary easing ahead. Also, Bank of Japan statement comes ahead of the U.S. Federal Reserve's monetary policy decision on Wednesday stateside, where the central bank is widely expected to cut its benchmark lending rate for the first time since 2008 by 25 basis points.

ECONOMIC NEWS: BoJ Maintains Policy Rate Unchanged --The Bank of Japan policy board, on Tuesday, voted 7-2 to maintain interest rate at -0.1% on current accounts that financial institutions maintain at the bank. The Bank of Japan maintained its ultra-loose monetary policy, as widely expected, and lowered its inflation forecast. The bank said it will purchase government bonds so that the yield of 10-year JGBs will remain at around zero%. Further, the bank will purchase JGBs in a flexible manner so that their outstanding amount will increase at an annual pace of about JPY 80 trillion. The bank said inflation is likely to increase gradually towards 2%, mainly on the back of the output gap remaining positive and medium-to long-term inflation expectations rising. The bank lowered its inflation forecast for fiscal 2019 to 1% from 1.1%. The projection for the fiscal 2020 was downgraded to 1.3% from 1.4%.

CURRENCY NEWS: The Japanese yen strengthened against the US dollar, reversing weakness earlier in the morning after of the Bank of Japan's policy announcement. The Japanese yen, widely viewed as a safe-haven currency, traded at 108.64 against the dollar after seeing an earlier low of 108.94.

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