BoJ: Policy unchanged, forward guidance adjusted - TDS

Analysts at TD Securities note that the BoJ unsurprisingly left policy unchanged, but adjusted its forward guidance.

Key Quotes

“The 10 year yield target was left at 'about 0%' and policy balance rate was maintained at -0.1%. The main change was the commitment “to keep extremely low rates at least through around Spring 2020”. BoJ lowered both FY 2019 and FY 2020 growth forecasts to 0.8% and 0.9%, respectively (previously 0.9% and 1%) while tweaking the CPI forecast lower for FY 2020 lower.”

“Overall, the explicit commitment on low rates and lower CPI/growth forecasts paints a more dovish message, reflecting the difficulty in achieving the inflation target. Other tweaks include expanding the eligible collateral for provision of credit and considering a facility to lend ETFs to investors. The outcome helped to arrest the downward move in USDJPY today.”