Article by ForexTime
The yen jumped after data showed that Japan’s economy grew more than expected during the first three months of this year. The fact that Japan avoided a recession helped diminish the prospects of near-term monetary policy easing by the Bank of Japan.
The Japanese economy grew by 0.4 per cent seasonally adjusted quarter-on-quarter from a revised 0.4 per cent contraction (previously -0.3 per cent) in the December quarter. That came in comfortably above expectations for 0.1 per cent growth.
At an annualized pace, GDP rose to 1.7 per cent quarter-on-quarter in the first three months of 2016, a reversal from the December quarter’s 1.7 per cent decline (previously -1.1 per cent), and well ahead of expectations for growth of 0.3 per cent.
The data, at the headline level, may provide some comfort for the Bank of Japan, which took interest rates into negative territory on January 29. The experiment failed to tame the yen, which is now trading stronger than before that decision, and has been seen as a negative for commercial banks, whose profitability is being eroded by the negative rates.
Article by ForexTime
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