There is nothing of substance re policy change expected from the Bank of Japan this week.
There is a little political instability in Japan right now with Prime Minister Suga stepping aside and his replacement to be chosen by his party on September 29. When I say a little instability, it really is a little. Whoever is chosen the transition will be smooth, as will the general election coming next month (or perhaps November).
In this sea of minor instability, the Bank of Japan will be a rock at its meeting this week, Wednesday 22 September. There are expected to be no changes to any of the major policy planks:
- will maintain its short-term interest rate target at -0.1%
- & for 10-year bond yields around 0%
Daiwa comment:
- The economy is stagnating in the current quarter, which is causing some delay in Japan's recovery
- There's a good chance the BOJ may revise its view on output (ie likely to remain weak for the balance of 2021)
