Bank of Japan policy announcement due Tuesday - preview

Author: Eamonn Sheridan | Category: Central Banks

I posted a quick one earlier: Quick preview of the BOJ meeting this week

In addition to the statement the Bank will update their Outlook for the Economy and Price 

This now, via Nomura (bolding mine):

We expect the BOJ to leave monetary policy unchanged at the meeting
  • The economy has been solid and, although core inflation (inflation based on all items in the CPI index less fresh food) has been rising, it is far from the 2% target, indicating there is little justification for making any changes to monetary policy.
In the Outlook for the Economy and Prices (Outlook Report) that will be released at the time of the meeting, we expect GDP growth forecasts for FY17 and FY18 to be raised.
  • Since the Outlook Report was last released in October 2017, growth in the global economy has gathered pace, and we expect this to be reflected in the upcoming release of the report.
  • Annual revisions to GDP data might also affect FY17 forecasts.
  • We think the forecast for core inflation will be left unchanged.
  • Recent increases in crude oil prices are likely to boost inflation, but yen strengthening against the dollar is likely to counter this boost and we do not expect changes to the core inflation forecast resulting from changes to import prices to be carried out this time.
At the BOJ governor's press conference after the meeting, the governor might be asked about the decision to reduce the amount of longer-term bonds it purchases and his view of the market's reaction, as JPY strengthened after the purchase amount was scaled back on 9 January.
  • We expect Governor Kuroda to reiterate the position that intentions with regard to changes to monetary policy are not reflected in daily market operations and that, regardless of the market's reaction, tenacious easing efforts will continue.

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