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Daniel Brødsgaard, analyst at Danske Bank, notes that the BoJ has kept its QQE with yield curve control unchanged at a meeting ending this morning.

Key Quotes

“It tweaked the forward guidance somewhat though, now saying they “will keep very low-interest rates levels for an extended period of time at least through to around spring 2020″. Until now there was now specific time frame for how long rates would be kept at low levels.”

“The BoJ cut its GDP forecast for FY2018 ending in March from 0.9% to 0.6%, which is no surprise considering what looks like a weak Q1. In addition, FY2019 and 2020 GDP and inflation forecasts have been cut slightly. Particularly interesting is the new inflation outlook, which now includes FY2021.”

“BoJ expects CPI inflation to hit 1.6% by then (lowest t+2 inflation forecast since 2013). That is, the BoJ does not expect to meet its inflation mandate within a two to three-year horizon.”