Bank of Japan Preview: Six major banks expectations

The Bank of Japan (BoJ) will announce its Monetary Policy Statement on 17 September at 03:00 GMT. The market consensus is for the BoJ to stay on hold and as we get closer to the release time, here are the expectations forecast by the economists and researchers of six major banks regarding the upcoming central bank’s meeting. As far as the yen is concerned, attention is on politics as Yoshihide Suga has officially assumed his position as Prime Minister, replacing his long-serving boss Shinzo Abe.

Standard Chartered

“The BoJ is likely to maintain the policy balance rate at -0.1% and the 10Y yield target at c.0%. We see limited room and drivers for the BoJ to change its monetary policy stance.”

ING

“The BoJ is expected to leave policies on hold. Yet, there will be some interest here as the BoJ’s meeting is the first since Prime Minister Shinzo Abe’s resignation in late August, the event that might have fuelled speculation about even easier BoJ policy to soften the Covid-19 blow to the economy.”

TDS

“BoJ continues to implement its current array of policy measures but is unlikely to add to them. Pressure has arguably lessened, with Q3 activity picking up and a second wave of virus cases receding. As such, BoJ is likely to upgrade its economic assessment, albeit modestly, while continuing to highlight downside risks. Attention will focus on the LDP’s vote on the party leader.”

Rabobank

“Given that a change in PM hasn’t rocked markets it is unlikely that the JPY will take much lead from this week’s BoJ policy meeting. While there is some talk in the market that the BoJ may follow the Fed in announcing that it would be prepared to allow CPI inflation to overshoot its target, this would be little more than a pipe-dream. The BoJ has never hit its inflation target and increased slack in the economy will not be helping this cause.”

Wells Fargo

“We do not anticipate any further easing from the BoJ, though we see the risks as skewed towards some type of more accommodative policy.”

Danske Bank

“We expect it to keep its QQE with yield curve control framework unchanged and we will look for signs whether the BoJ might start to put more emphasis on developments on the labour market.”