The Bank of Japan meet Thursday and Friday this week, announcement to come on Friday at the meeting's conclusion

And, if you thought the ECB meeting was gonna be a big fat 'no change', what about this one? ..... yawanarama (famous last words?).

Points of interest surround

  • the BOJ's projection for hitting the 2% target - will they keep it at around fiscal year 2019 or invent some new fictitious timing?
  • And will new Deputy Governor Wakatabe dissent and ask for even MOAR easing efforts?


  • We see little room for surprises assuming Deputy Governor Wakatabe supports existing policy for the time being, contrary to fellow QE advocate Kataoka, the lone dissenter to date.
  • We also expect the BoJ to keep its ETA for reaching the 2% price stability target at "around FY19.


  • We don't expect any fireworks.
  • The projected timing for reaching the 2% inflation target in the Outlook Report will likely be kept at around FY2019. Citi Economics note, "Some observers are paying attention to whether new deputy governor Masazumi Wakatabe, who is considered a reflationist, will vote against current policy and propose new additional easing".


  • The BoJ is in no rush to tighten policy given benign inflation, soft household spending and weak wage growth. Nonetheless, the BOJ may be encouraged by the fact that headline and core CPI are creeping higher. Although in no rush the BoJ is discussing potential exit opens.


We expect the BOJ to leave monetary policy unchanged.

  • This will be the first meeting since the reappointment of Governor Haruhiko Kuroda and the appointment of Deputy Governors Masayoshi Amamiya and Masazumi Wakatabe.
  • Based on remarks made by the three nominees before the Diet, we expect no immediate changes to monetary policy.

In the Outlook for Economic Activity and Prices (Outlook Report), which will be released at the same time, we expect the core inflation forecasts for FY17 and FY18 to be lowered by 0.1 percentage points (pp) as we believe signs of acceleration in inflation in the run-up to the end of March were scarcer than anticipated by the BOJ.

  • We expect the core inflation forecast for FY20 (excluding the effect of an increase in the consumption tax rate), which will appear in the forecast for the first time, to be the same as the 1.8% forecast for FY19.
  • We expect a slightly lower GDP growth forecast for FY17 and FY18, reflecting the slowdown in growth in January-March, and FY19 to be unchanged.
  • The first FY20 GDP growth forecast should continue to be in line with potential growth, if we assume no rise in the consumption tax rate in October 2019. We would expect a growth forecast of 0.6% if the downturn in response to the demand surge prior to the consumption tax hike is taken into consideration.

At the governor's post-meeting press conference, we expect

  • questions on the JPY80trn annual JGB purchase target,
  • the need to continue ETF purchases,
  • and the possibility of raising the target for long- and short-term interest rates under YCC.
  • With the new line-up of deputy governors we are interested - from the perspective of gauging the policy stance - to see whether or not the tone of their answers to these questions changes.