(Yicai) March 20 -- It is unlikely that Japan's shift after eight years of negative interest rates to reflate the economy will affect the global market in the short term as it is the moves of the Federal Reserve that matter the most while Chinese asset prices are expected to remain stable, according to analysts.

The Bank of Japan ended its policy aimed at tackling deflation and sluggish growth yesterday by raising rates to a range of zero and 0.1 percent from negative 0.1 percent. It also stopped controlling yield curves and finished buying exchange-traded funds and real estate investment trusts but kept the scale of bond purchases unchanged.

Japan is the largest foreign holder of United States sovereign debt. After the central bank's move, some analysts worry that Japanese investors will turn away from American bonds and come back to the domestic market, which would impact global asset prices. But analysts interviewed by Yicai beg to differ.

The BOJ's decisions linked to negative rates, yield curve control, and ETF purchases are quite in line with the expectations, said David Scutt, market analyst at New York-headquartered StoneX. Scutt added that he is not surprised if the yen falls against the US dollar again because the BOJ is sticking to its bond purchase plans, diverging from other major economies.

Given that the US inflation and economic activity have remained strong, the Fed could lower this year's anticipated rate cuts to two, down from the predicted three, so the "dollar bull" could make a comeback, and the strong greenback could still dominate the market in the first half, Scutt said. The American central bank is slated to meet today to reveal its next move. The last time it lowered interest rates was in March 2020.

No cuts are certain just yet. If Chairman Jerome Powell and his team propose a clear scheme this week to gradually slow the contraction of the Fed's balance sheet from next quarter, rate cuts of any form will seem not very likely, at least until June, per Matt Weller, global head of market research at StoneX Retail.

Emerging markets, including Chinese stock markets, would benefit from a change of direction in the US monetary policy, and the pressures on the redback could ease, analysts said.

Foreign investors are starting to pay more attention to Chinese assets as some institutions say that they may have to consider rebalancing soon as their holdings of US stocks have expanded in contrast to their decreasing exposure to the Chinese market, said Emily Whiting, investment specialist at JPMorgan Asset Management.

However, the Chinese yuan is not fully protected from the impact of the strong US dollar, said Lemon Zhang, macro and currency strategist at Barclays Bank. Still, the central bank is expected to guarantee a stable exchange rate, she added.

Editors: Xu Wei, Emmi Laine