17 Nov 2015
BoJ Preview: Unlikely to change course in the near future – ING
FXStreet (Delhi) – James Smith, Economist at ING, suggests that given the BoJ’s recent tendency to only change policy when it releases its bi-annual outlook, it is unlikely the monetary policy stance will change much in the near future.
Key Quotes
“With the weaker yen currently hitting consumption harder than it is boosting exports, the government and BoJ will be wary of triggering any further sudden depreciation (particularly against the backdrop of a more hawkish Fed). Indeed, emphasis appears to have shifted back towards fiscal policy, with a supplementary budget likely to be revealed over the coming weeks.”
“Looking further ahead, the BoJ could start to encounter problems in finding enough sellers to meet its annual ¥80tr target, particularly when the redemptions are considered (we estimate that these will total ¥37tr in 2016). Although Gov. Kuroda will likely reiterate this week that QQE doesn’t face limits, this stance will inevitably have to change as the pressures start to build.”
“Ultimately, we believe that tapering of JGB purchases will need to be looked into in the not too distant future. But with downside risks to growth likely to persist and core inflation (without energy) unlikely reach to 2% by 2H16, the BoJ may have to look at new policies to maintain effective stimulus.”
Key Quotes
“With the weaker yen currently hitting consumption harder than it is boosting exports, the government and BoJ will be wary of triggering any further sudden depreciation (particularly against the backdrop of a more hawkish Fed). Indeed, emphasis appears to have shifted back towards fiscal policy, with a supplementary budget likely to be revealed over the coming weeks.”
“Looking further ahead, the BoJ could start to encounter problems in finding enough sellers to meet its annual ¥80tr target, particularly when the redemptions are considered (we estimate that these will total ¥37tr in 2016). Although Gov. Kuroda will likely reiterate this week that QQE doesn’t face limits, this stance will inevitably have to change as the pressures start to build.”
“Ultimately, we believe that tapering of JGB purchases will need to be looked into in the not too distant future. But with downside risks to growth likely to persist and core inflation (without energy) unlikely reach to 2% by 2H16, the BoJ may have to look at new policies to maintain effective stimulus.”