A preview of the Bank of Japan meeting today (announcement due around 0230-0330GMT 8 April 2015).

Yep, the Bank of Japan conclude their 2-day policy meeting today, with the announcement expected between 0230-0330GMT.

  • Pretty much the entire market thinks the bank will remain on hold today, with no new policy action to be announced.
  • The funny thing, though ... the BOJ hold another meeting this month, a one-dayer, on April 30, so in about 3 weeks time.
  • This April 30 meeting is seen as much more critical, as it is then that the BOJ will formulate fresh long-term forecasts.

But ... for now ... what about today?

Where are we at?

  • Japan has barely any wage growth ... Japan - revised data shows wage growth much weaker than previously reported
  • Weak household spending
  • Zero core inflation ... quoting myself:
the National CPI for February ... comes in at 2.0% ... but note also ...

The BoJ estimates that the April 1 tax hike added 1.7 percentage points to the core CPI data in April and 2 per cent thereafter.

Got that?

What's 2 - 2?

Yep - the measure of inflation used by the Bank of Japan is now flat ... zero ... zilch .

(and an even bleaker picture here)

The data is in stark contrast to the BOJ outlook, oft repeated by Kuroda et al, that inflation expectations are unchanged and there is inflation to come ... often saying inflation is on track to hit 2% in fiscal year 2015. Kuroda and gang are looking for a growth pick up, citing improving exports and industrial production.We'll see.

Note also, though, political pressure for more action and a weaker yen seems to have diminished markedly One reason ... is that a weaker yen has been unpopular with consumer and small business, and local elections will be held in two rounds on April 12 and 26

But, this contrasts with recent comments from Kozo Yamamoto, a leading expert on monetary policy in Abe's ruling Liberal Democratic Party, speaking in an interview with Reuters last week who said that the Bank of Japan must ease monetary policy further at its rate review on April 30

So, it seems there are still pressures for more BOJ easing, but the market consensus is not expect it today, but rather later in the year and maybe even as early as April 30.

Perhaps though, and something to watch out for, we'll get some groundwork laid today, especially at Kuroda's press conference, which may put pressure on the yen to weaken.