JPY-
It's rare when Japan gets a spotlight, but when it does, it's generally of the utmost importance. Being the first of the G-7 central banks to meet in this packed week, traders were bound to be watching proceedings, not just for the impact on Japan, but what it may suggest about the entire G-7 and G-10 reaction to the ongoing conflict.
If the 6-3 split in Japan is replicated by the other central banks this week, the global outlook for not just FX, but growth, employment and essentially every other indicator changes too.
The BoJ also starkly raised its inflation forecast for this year, going from an average of 1.9% to 2.8%, a massive increase for Japan. Again, the key point is that if this is just the rumblings coming from a country that had to fight deflation for nearly 30 years, what will happen to European and UK inflation? This is the second such energy shock in the space of 4 years, with the economic consequences potentially being as dramatic as the first.
The Japanese may, for the most part, be "waiting and seeing", but the longer this conflict drags on, the closer we come to hands being forced.
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