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Analysts at Nomura suggest that the next BOJ meeting on 30-31 July represents interesting event risk for Japan trading and fundamentally, they believe the meeting will be negative for JPY in the medium term.

Key Quotes

“Likely significant lowering of inflation forecasts suggests the window for BOJ policy normalization is now closing. However, the meeting is an opportunity for the BOJ to consider feasible measures to alleviate negative side effects, as it likely admits the economy needs a more prolonged period of monetary easing.”

“Although very unlikely, in our view, the Bank could consider changing its 10yr yield target as necessary to ease side effects. Other policy measures outside the monetary policy toolkit to boost JGB market volatility and trading volumes may also be considered.”