Investing.com - Financial Markets Worldwide

Bank Of Japan preview: It Works So Far, BOJ On Autopilot‏

ByDanske Markets
Published 07/10/2013, 08:08 AM
Updated 05/14/2017, 06:45 AM

The Bank of Japan (BoJ) meeting on Thursday should prove uneventful compared with the latest Fed, ECB and BoE meetings. We do not expect BoJ to announce any additional easing measures. The data released since the last meeting in mid-June suggest the economy continues to recover strongly and is gradually moving out of deflation. Broader money supply growth also continues to accelerate, suggesting that BoJ's aggressive expansion of the monetary base is spilling over to the broader economy.

At the previous meeting BoJ's main concern was that tighter financial conditions from higher bond yields, a slump in stock prices and a sudden renewed appreciation of JPY could derail the recovery. However, Japanese financial markets have stabilised since the last meeting and particularly Japanese bond yields have been remarkably stable despite volatility on global bond markets. For that reason a possible extension of the maturity of BoJ's fixed rate operations to anchor the short end of the yield curve now appears to be off the table.

BoJ is widely expected not to announce any easing measures, so we do not expect a substantial market reaction. Looking ahead we do not expect BoJ to announce additional easing measures unless the economic outlook deteriorates substantially. Hence, BoJ will be on autopilot for the rest of the year.

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