BoJ Preview: Major Banks expecting no change in policy setting tomorrow

Tomorrow, we have the Bank of Japan meeting scheduled and analysts and economists from major banks are expecting that the meeting is likely to be a non-event with the bank likely to maintain the status quo in all categories of monetary policy.

TD Securities

“TD and unanimous consensus expect no change in policy from the BoJ (policy rate -0.1%, 10y target zero). Recent comments from Kuroda highlight that further easing could be contingent on the JPY.”

“Recent comments from BoJ Governor Kuroda highlight that further easing could be contingent on the JPY. If the JPY strengthens BoJ could consider options such as further lowering short term rates, buying more assets, increasing the monetary base or cutting the long term yield target. None of these are likely to be on the table as the JPY has weakened from 108 to 112 so far this year.”

Goldman Sachs

“We expect the BOJ to maintain the status quo in all categories of monetary policy.”

“Specifically, we expect the BOJ to maintain its short-term policy rate target of -0.1% and 10-year yield target of 0% (leaving the band for 10-year yields at ±20 bp) and make no changes to its program of ETF and other risk asset purchases.”

“Also, we expect the BOJ to maintain its long-term JGB purchase guideline of increasing its net holdings at a pace of about ¥80 tn per year.”

“Discussion at the meeting will focus on evaluating January data, especially production and export data, which were notably weak.”

“The BOJ will likely need to lower its production and export assessment, in our view, while it is likely to maintain its overall economic assessment.”

ANZ

“Although we don't anticipate any policy change from the central bank this week, we think it must be getting close to a tipping point in terms of considering easing policy more, rejigging its easing framework or rethinking its inflation goal.”

“At the current level of the JPY, the BoJ may not be in a hurry to implement any further easing as it could be a wasted opportunity.”

“If easing does become a higher priority, we think reinforcing forward guidance is probably the best option. However, this isn't likely to provide the bank with much bang. Thus, the BoJ is likely to do so alongside a boost in asset purchases even if this introduces more distortions.”

Deutsche Bank

“For the BoJ on Friday, no change in policy is expected and the meeting also doesn't include an outlook report so it's likely to be mostly a non-event.”