7 Apr 2015
BoJ might keep current policy intact – BAML
FXStreet (Barcelona) - According to BofA-Merrill Lynch, focus at the 7-8 April MPM will likely be on the BoJ's overseas economic risk assessment, but expect no change in policy framework.
Key Quotes
“We expect the Bank of Japan (BoJ) to maintain the current monetary policy framework, such as size of asset purchases and tenor of target bonds, at the upcoming Monetary Policy Board meeting on 7-8 April.”
“We expect the focus at the upcoming monetary policy meeting to be on the BoJ’s assessment of the economy. The recovery in manufacturing industry output is weaker than expected…and the large manufacturer business conditions DI in the BoJ’s Tankan business confidence survey in March coming in flat.”
“On the other hand, the large non-manufacturer business conditions DI improved from +17 in December to +19 in March, the employment conditions and production capacityDIs (excessive minus insufficient) improved, indicating the output gap is narrowing.”
“While the focus will be on the BoJ’s assessment of the risk from overseas economies, there seems to be little need for the BoJ to take urgent action at the upcoming policy meeting given US fundamentals are basically sound, China is moving in the direction of stimulus, and yen rates versus other currencies are stable.”
“We think it is also unlikely to change policy at the upcoming meeting from a timing perspective given that local elections are approaching on 12 and 26 April, and the BoJ is set to update its economic outlook on 30 April, after the policy meeting where it publishes its biannual economic outlook report.”
Key Quotes
“We expect the Bank of Japan (BoJ) to maintain the current monetary policy framework, such as size of asset purchases and tenor of target bonds, at the upcoming Monetary Policy Board meeting on 7-8 April.”
“We expect the focus at the upcoming monetary policy meeting to be on the BoJ’s assessment of the economy. The recovery in manufacturing industry output is weaker than expected…and the large manufacturer business conditions DI in the BoJ’s Tankan business confidence survey in March coming in flat.”
“On the other hand, the large non-manufacturer business conditions DI improved from +17 in December to +19 in March, the employment conditions and production capacityDIs (excessive minus insufficient) improved, indicating the output gap is narrowing.”
“While the focus will be on the BoJ’s assessment of the risk from overseas economies, there seems to be little need for the BoJ to take urgent action at the upcoming policy meeting given US fundamentals are basically sound, China is moving in the direction of stimulus, and yen rates versus other currencies are stable.”
“We think it is also unlikely to change policy at the upcoming meeting from a timing perspective given that local elections are approaching on 12 and 26 April, and the BoJ is set to update its economic outlook on 30 April, after the policy meeting where it publishes its biannual economic outlook report.”