BOJ decision day — preview (add this to the other previews!)

Turn off the telly, put away the Scrabble, its Bank of Japan day!Wait … BOJ day … OK then. go back to the TV &/or Scrabble ….
No change in policy is expected (I have been waiting for the bank to formally abandon its commitment to buy 80tln yen of JGBs in the year, with YCC its irrelevant and they won’t be anywhere near that this year … but I am so glad I have not been holding my breath … maybe today, maybe not, I dunno … when they do I expect we’ll get a silly knee jerk yen buy response which should be faded).
Where was I? Ah yes, previews — these are ones I have already popped up:

  • Preview of the BOJ meeting (Cap Eco)
  • Moving along — preview of the Bank of Japan meeting
  • Preview of the Bank of Japan meeting (announcement due Tuesday)
  • BOJ likely on hold this week, but to nudge down inflation forecasts

Here are more (bolding mine):Bank of America / Merrill Lynch (I already posted an in brief one from them, this is a little more):

  • We expect the Bank of Japan policy board to maintain the status quo for monetary policy
  • Specifically, the board is likely to leave its target for the short rate and 10-year yield unchanged, at -0.1% and «around 0.0%,» respectively.
  • We also expect the BoJ to retain its guidelines for risk asset purchases, including its «about» ¥6tn/year ETF target. The recent rally in Japanese equity markets had seen the BoJ’s ETF purchases slow sharply in October.
  • Some investors have asked whether the BoJ may announce a reduction in its risk asset purchase targets in the relatively near future. However, we think the hurdle for such a cut remains very high.
  • In terms of the sequencing of BoJ policy normalization, the next step is likely to hike the 10-year yield target. But as our base case, we maintain our view of no hikes in 2017 and 2018, amid moderate inflation. At the very least, we think the BoJ will want to confirm the momentum for wage hikes and price revisions at the beginning ofFY18 before making the next policy move. Given the lags in data availability, this means that the earliest possible timing for a change in policy would be Jul-Sep 2018, in our view.

Barclays:

  • We expect the BoJ to keep policy unchanged. In its quarterly Outlook Report, we expect forecasts for core CPI inflation to be lowered further toward consensus, especially for FY17, while those for real GDP growth are kept largely intact.

HSBC:

  • We believe the BoJ is likely to stay on hold for an extended period of time, as inflationary pressures are likely to be weighed down by structurally low wage growth.
  • Even though the BoJ has started tapering JGB purchases, this should not impair the bank’s ability to control the 10y JGB yield, and the loose monetary stance should be broadly unaffected.
  • In terms of forecasts, we believe the BoJ is likely to marginally revise down its core inflation forecast from the current 1.1% for FY2017.

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