The Bank of Japan meets on Monday and Tuesday (17th and 18th)
- It is not expected to announce any changes to its monetary policy at the conclusion of the meeting
- It is unlikely the BOJ will change their view that the economy is “recovering moderately”
- Economists at the BOJ mostly agree that Japan’s current economic and price trends are headed in the right direction, and in line with their expectations
- But – there are some concerns coming to the surface since the January meeting
- Gone is the strong optimism among the bank’s senior officials about a steady global economic recovery
- There is now a sense of uncertainty about the prospects for emerging economies
- And also concerns growing about the U.S. economy, with its mixed signals of recovery
- Kuroda has continued to indicate that the BOJ sees no need to change its official view that the economy is on track to achieve the bank’s annual inflation target of around 2% in two years
- Also, market expectations for a further easing by the BOJ have changed since January
- There was a lot of speculation (and expectation from some) that the BOJ would take additional steps to expand its program as early as during the January-March quarter. Others said action would come later, to cushion the negative economic impact of the scheduled consumption tax hike in April
- Kuroda has effectively dismissed all these expectations – he says consumer prices will continue to grow at the lower-1% level for about six months, and that the the BOJ would not ease its policy further even if the inflation rate flattened out. he also expressed confidence in the resilience of the Japanese economy
So, while there are no changes expected to be announced, much attention will focus on Kuroda’s press conference following later in the Japanese afternoon (0630GMT on the 19th), where market players will attempt to divine some clues about the BOJ’s thinking for the months ahead.
