Central Banks

Here are the links to the previews posted on site earlier for the Bank of Japan monetary policy meeting today 

Reminder … there is no scheduled time but the statement usually
comes in the 0230 to 0330GMT time window. Governor Kuroda’s press conference will begin at 0630GMT. Speaking of the presser, this preview via  Scotiabank highlights its importance:

The Bank of Japan’s latest policy pronouncements are not expected to present a shift in directions or guidance later in the week.

  • Governor Kuroda sparked some market concern in early March when he remarked that 2019 could be the year for exiting policy stimulus and then dialed that back just days later when he said: “Right now it’s too early to debate what tools we should use, and what kind of pace we should take. I said that we would be discussing how to move forward with exit. I never said we would be exiting immediately in fiscal 2019.”

Communications risk is the more likely source of market volatility than substantive changes in policy direction.

  • It’s difficult to envisage the scenarios that could motivate a move away from the “around zero” nominal 10 year bond target.
  • Core inflation is still stuck around 1% y/y and hence at about half of the inflation target.
  • The yen is still about 5% firmer versus the USD so far this year.
  • Further, another sales tax increase is planned for October of next year and will likely dampen consumption while sparking transitory inflation and then renewed disinflation.
  • The BoJ’s rising share of the JGBs market is not at dysfunctional levels especially in light of the ‘around zero’ target that substitutes an option to buy as a dare to markets for tangible purchases.

I’m not sure where their squeegees are 

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