On Wednesday, the Bank of Japan published the minutes of its January policy meeting. IItwasimplying optimism about Japan's inflation outlook going forward. 

Most of the BoJ officials expect inflation to touch 1 percent in the coming months. In fact, one member said that it could be close to the 2% target based on the recent situation. 

However, a majority of BoJ policymakers stressed the need to maintain the ultra-loose monetary policy in an effort to support the fragile domestic economy.

That is especially after the emergence of the Omicron variant that threatens the global economic recovery. That variant raises the awareness about the coronavirus pandemic. 

The Types Of Inflation Must Be Observed

It is possible that the Japanese consumer inflation on an annual basis could reach 2 percent. If this scenario happens, then the most important thing is to look at the facts behind the rise Of that. 

It means that whether the type is temporary or sustainable. This opinion was said by one of the BoJ policymaker in an occasion.

Consumer inflation could temporarily reach 1.5% in the first half of 2022. Whether this upward momentum can occur sustainably so that it can stabilize near the 2 target.

However, everything depends heavily on the trend of workers' wages and inflation, or overall referred to as a strength of demand. That was informed by another BoJ member.

The Raising Price of Fuel Is One of the Prices

Japan's consumer inflation has risen in recent months due to the rising prices of fuels and raw material commodities in international markets. Japan itself is a kind of a developed country. 

It Is also the most late to be affected by rising commodity prices. Because, many companies there are reluctant to adjust their prices considering japanese consumers are very sensitive to the increases.

That is why; optimism about the this situation is not fully supported by all members of BOJ policymakers. Others remain skeptical of Japan's outlook as well. 

According to them, it will be difficult to reach the BoJ's inflation target in the range of 2 percent until the end of 2023. They could say that based on the considerations an recent moments.

USD / JPY is waiting for the Fed’s Announcement 

The minutes of the BoJ's January meeting showed that ultra-loose monetary policy would remain in place. It’s stance has actually been anticipated by market participants so far. 

That is why; it does not have a high impact on the movement of the Yen against the US Dollar. The USD/JPY pair is currently moving slowly in the range of 113.82 right now in the market. 

The market's attention on the Fed's announcement makes them less likely to wait and see in today's trading. It shows that the participants are quite careful to take the further actions. 

Meanwhile, The U.S. dollar index (DXY) has soared since yesterday and continues to climb above the 96.00 threshold in today's trading. 

Tension in the Ukraine Causes the Stronger Dollar

While market participants look forward to the FOMC meeting that will begin later tonight, tensions on ukraine's borders are grabbing the world's attention. How far the role that it has? 

The potential for military conflict caused EUR/USD to fall in the range of 1.1300. In the other side, the safe haven currencies USD and JPY actually strengthened.

Public attention to the Ukraine crisis initially came to the fore when the White House last week expressed a concern over an increase in the number of Russian troops on standby at the Ukrainian border. 

The market initially shrugged off the news, but tensions is gradually intensified. U.S. President Joe Biden has called for diplomats' families to leave Ukraine immediately, while considering sending the troops to counterbalance the threat of a Russian attack.