AUD/JPY Sharply Declines Below 88.40, BoJ Next Steps Policy

The Australian Consumer Price Index (CPI) data came in higher than expected but stayed lower than previous releases, still the pair of  AUD/JPY instruments has fallen down below 88.40. According to the Australian Bureau of Statistics, the quarterly CPI (Q1) increased by 1.4% at a faster rate than anticipated by market players, but less quickly than the previous rate of 1.9%. Annual inflation has moderated to 7.0%, which is somewhat higher than the predictions of 6.9% but lower than the 7.8% reported in the previous edition.

The monthly CPI index, which had already significantly slowed down from its peak of 8.4% in December, has now slowed down much further to 6.1%, falling short of both the consensus expectation of 6.6% and the prior report of 6.8%.

The Reserve Bank of Australia (RBA), which made the decision to maintain interest rates at 3.60% at its monetary policy meeting in April, will be supported by Australian inflation.

The Bank of Japan's (BoJ) interest rate announcement, set for April 28th, will be the major event in terms of the Japanese Yen. New BoJ Governor Ueda must maintain the expansionary monetary policy to stimulate domestic demand in order to guarantee inflation over 2%. Kazuo Ueda stated on Monday that the economy has been affected by increasing import costs more than expected, necessitating the continuation of an ultra-loose monetary policy in order to maintain inflationary pressures.