Preview of the Bank of Japan meeting, via Scotia. This in summary of a much longer article:
- No change to the target rate of 0.1% is expected
- Forecast updates will be provided with this decision and could be key to further informing market pricing in preparation for further tightening of around 20 basis points later this year.
- An additional key could be guidance on whether and when to start reducing the size of the BoJ’s huge balance sheet after ending yield curve control at the last meeting.
Scotia highlights new developments since the last full forecast meeting in January (the BOJ changed policy at the March meeting):
- Spring Shunto union wage talks set for fastest wage hikes in decades
- oil prices have increased
- the yen has further depreciated by around 4% against the dollar since January
- underlying inflation has fallen sharply
And to conclude:
- Ueda unlikely to guide future actions at this meeting… as new evidence is gathered
- However, its latest forecast of core inflation of 2.4% this year and 1.8% next year could be revised upwards with a little more confidence in achieving a sustainable rate. by 2%.
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The Bank of Japan’s decision is expected on Friday, April 26 between 02:30 and 03:30 GMT (Thursday evening, US time, 10:30 p.m. – 11:30 p.m.). The BOJ does not set an exact time for the exit.
This article was written by Eamonn Sheridan at www.forexlive.com.
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