BoJ Partners with Chorus on Global Growth Issues: Decision Day Guide


(More Bank) – The Bank of Japan should highlight the cautious sentiment of global central banks by revaluing some of its economic valuations on Friday. The central point is whether the darker international outlook suggests a new monetary easing.

The BoJ will maintain its performance curve control program and unchanged asset purchases at the end of a two-day meeting, according to the 46 economists surveyed by More Bank. With signs of a weakening economy, the bank is likely to discuss reducing its valuation of exports, production and overseas economies, according to people familiar with the subject.

Although the BOJ amends some economic assessments, it is unlikely that its overall view of a moderate expansion of the economy will be changed, the population said.

While the growing gloom has pushed the Federal Reserve to stop on interest rate hikes and the European Central Bank has tightened its monetary easing, Governor Haruhiko Kuroda should avoid signaling that a policy change could come soon, which would shake the markets in yen, bonds and equities.

Most economists surveyed still see the BoJ sticking to its current policy before limiting its stimulus measures in the future. But a growing minority of them are planning further easing as the next political step rather than a tightening.

They report growing concerns about the weakening of the Japanese economy and the likelihood of inflation heading to zero – or even below – later in the year, as tax increases are expected to continue. complicate things.

The BoJ usually publishes its policy statement around noon, followed by a Kuroda press briefing at 3:30 pm. in Tokyo.

What to look for

Japan's Finance Minister Taro Aso said this week that Japan could be a little flexible in its approach to the 2% inflation target. One will probably ask Kuroda if there is a divergence with the government as to what it sees as a global standard. The comments on the yen will deserve special attention, as they are seen as a decisive factor that could push the BOJ to strengthen its stimulus measures, a view reinforced by Kuroda himself recently. While the yen has fallen from the peak of 104.87 reached in January, economists warn that management could change quickly in case of bad growth or business information. Kuroda could also question how the BOJ's policy had contributed to the reduction in profit forecasts of Mizuho Financial Group, the third largest lender in Japan, indicating that side effects could start to hurt mega-banks, not just lenders. local.

"I expect the BOJ to suspend any further easing until the likelihood of a recession increases because it wants to preserve its meager political resources," said Hiroshi Ugai, an economist who Chief at JPMorgan Chase & Co. and former head of the BOJ.

What More Bank Economists Say

Signs of a weakening of the economy have appeared in recent data. "But at this point, it is not enough to raise a lot of alarm, in our opinion. We believe that the BOJ is ready to overcome all the light turbulence in its current framework, while maintaining its policy parameters. "

–Yuki Masujima, economist in JapanClick here to display the article

Summary of the policy

Commit to keeping interest rates extremely low for a long time. A rate of -0.1% on some reserves remains at the central bank. The target rate of return on 10-year Japanese government bonds is close to zero percent. about 0.2 percentage points on both sides of the mark. The objective of increasing JGB assets by about 80 trillion yen a year is now a priority for interest rate control. The current pace of purchases has fallen to less than half that rate. A guideline to increase the holdings of exchange-traded funds by 6 trillion yen a year. Actual purchases vary considerably from month to month, depending on market conditions.

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@More

To contact the editors responsible for this story: Brett Miller at bmiller30@More, Paul Jackson

For more articles like this, go to More

© 2019 More Bank L.P.