A preview of the Bank of Japan monetary policy statement coming up on 23 January

The BOJ is meeting today and tomorrow. There is nothing much in the way of any change in policy expected, just in some of the Bank's forecasts.

I posted these last week:

• ANZ's preview of the BOJ meeting
• BOJ is about to cut is inflation outlook

Cap Eco on the BOJ:

• The Bank has pledged to keep rates low for an extended period to assess the impact of the sales tax hike on the economy. That means that it will keep both its policy rate as well as the target for 10-year JGB yields unchanged beyond 2020. Meanwhile, the Bank will probably slow the net increase in its JGB holdings further, perhaps to ¥20 trillion by 2020.

More:

• the Bank will keep its policy rate around its current level (-0.1%) for the foreseeable future. However, we suspect that mounting concerns about the impact of prolonged monetary easing on financial stability will convince the Bank to lift its target for 10-year government bond yields, perhaps to 0.5% in the early 2020s.

ASB:

• The Bank of Japan is widely expected to maintain current policy settings. With limited inflation in wages and prices, we do not predict any policy tightening in the foreseeable future.