Credit Agricole has provided their insights regarding the upcoming July meeting of the Bank of Japan (BoJ) and its implications for the Japanese Yen (JPY).

Key Highlights

  1. BoJ's July Meeting Anticipation:

    • Investors are looking forward to potential modifications to the Yield Curve Control (YCC) by the BoJ in their July meeting.
  2. Inflation Predictions:

    • Credit Agricole's Japan analysts foresee a declining inflation trend in the second half of 2023. Despite some inflationary pressures, structural barriers like sluggish wage growth and significant non-financial corporate savings will likely prevent inflation from consistently approaching the BoJ’s 2% target.
  3. Pressure on YCC:

    • The BoJ faces diminished pressure to modify its YCC to make it more sustainable. The reason being, while the market is still predicting more rate hikes by the Federal Reserve, it concurrently believes that the climax of these hikes is approaching. This anticipation reduces the upward pressure on the 10-year JGB yield.
  4. Likely Outcome:

    • Given these factors, Credit Agricole predicts that the BoJ will not make any significant changes to its YCC in the upcoming July meeting, which could lead to some disappointment among investors.
  5. JPY Outlook:

    • Any relief for the Japanese Yen stemming from potential positive surprises in inflation is expected to be short-lived.


Credit Agricole speculates that the Bank of Japan will maintain its current stance in the upcoming meeting and not introduce any significant adjustments to its Yield Curve Control. This is due to a variety of reasons, including anticipated lower inflation in the latter half of 2023 and lessened market pressures. As a result, investors hoping for changes in the BoJ's policy are likely to face disappointment, and any boost for the JPY due to inflation surprises will probably be fleeting.

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