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16 May 2014
BoJ to hold off - BAML
FXStreet (Guatemala) - Strategists at Brown Brothers Harriman have explained that the BoJ is likely to keep rates on hold on 20/21st May.
Key Quotes:
"We expect the Bank of Japan (BoJ) to decide to keep core policy on hold at the upcoming monetary policy meeting on 20-21 May. Since the last meeting, there has been no data or events that would likely prompt any material change in the BoJ's growth or inflation outlook in its Outlook report."
"There has been some instability in share prices and forex, but nothing likely to prompt additional action by the BoJ, in our view. Thus, we expect the BoJ to keep monetary policy unchanged with real interest rates in negative territory, while it continues to monitor the impact of the consumption tax hike and inflation data."
"Since the start of 2014, the BoJ has been trying to stoke market inflation expectations via verbal communications in order to enhance the impact of QQE, in our view. This means, it has been showing itself to be optimistic on the outlook for the economy and prices, while keeping additional easing as an option (the "Kuroda put") if downside risk increases. At the same time, to avoid being seen as "hawkish," it has sounded negative on any early exit, and clearly communicated its policy stance as keeping the lid on nominal rates to put downward pressure on real interest rates."
Key Quotes:
"We expect the Bank of Japan (BoJ) to decide to keep core policy on hold at the upcoming monetary policy meeting on 20-21 May. Since the last meeting, there has been no data or events that would likely prompt any material change in the BoJ's growth or inflation outlook in its Outlook report."
"There has been some instability in share prices and forex, but nothing likely to prompt additional action by the BoJ, in our view. Thus, we expect the BoJ to keep monetary policy unchanged with real interest rates in negative territory, while it continues to monitor the impact of the consumption tax hike and inflation data."
"Since the start of 2014, the BoJ has been trying to stoke market inflation expectations via verbal communications in order to enhance the impact of QQE, in our view. This means, it has been showing itself to be optimistic on the outlook for the economy and prices, while keeping additional easing as an option (the "Kuroda put") if downside risk increases. At the same time, to avoid being seen as "hawkish," it has sounded negative on any early exit, and clearly communicated its policy stance as keeping the lid on nominal rates to put downward pressure on real interest rates."