No surprises at the BoJ meeting – UOB

Researchers at UOB Group assessed the recent outcome of the BoJ meeting.

Key Quotes

“Bank Of Japan’s October decision provided no surprise as it decided to keep policy stance unchanged for the 9th consecutive meeting. The decision was not unanimous as new Board member, Goshi Kataoka, dissented for the second time in a row”.

“BOJ maintained its economic assessment with a slight GDP growth upward revision for FY2017 and kept its 2% inflation target to be reached at “around fiscal 2019”. But importantly, the BOJ noted the risks to growth “are generally balanced” but risk to inflation is “skewed to the downside”.

“We expect BOJ to maintain status quo for the rest of 2017 and in the first 6 months of 2018 although we still factor in a small probability for more BOJ policy easing especially if there is significant deterioration to the inflation outlook”.

“With BOJ monetary policy unchanged and staying in place in the coming months, USD/JPY will now be driven by the movement in US Treasuries yield where we note that the recent spike in 10 year US Treasuries yield above 2.45% (25 Oct) coincided with the high in USD/JPY of 114.40”.