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Bank of Japan definition
The Bank of Japan is the central bank of Japan, also known as the BoJ. It manages monetary policy, issues banknotes, and works to keep Japan's financial system stable.
The Bank of Japan uses its policy tools to steer interest rates, inflation, liquidity, and credit conditions across the economy. Those decisions reach Japanese government bonds, Japanese shares, bank lending, and the value of the yen.
As Japan's central bank, the Bank of Japan sits alongside peers such as the Federal Reserve and the European Central Bank, but it became known for holding interest rates very low, even negative, for an unusually long stretch. Traders watch BoJ decisions because they move yen pairs such as USD/JPY, EUR/JPY, and GBP/JPY. A hawkish BoJ message tends to support the yen, while a dovish one tends to weaken it.
Bank of Japan Example
The Bank of Japan signals that it may tighten monetary policy.
Traders read this as higher Japanese interest rates ahead and stronger demand for yen-denominated assets.
USD/JPY may fall if the yen strengthens against the US dollar after the message.
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