This is in summary from Société Générale on what to expect from the Bank of Japan on September 19
(meeting on Sep. 18 and 19, decision handed down on the 19th, Kuroda press conference to follow later)
Spoiler alert … don't expect any change …
OK here we go:
- The Bank of Japan (BoJ) policy board will likely maintain the current easing framework at the September monetary policy meeting (MPM).
- With no major changes to the economic data since the previous meeting, we expect the bank will maintain its current forward guidance and its assessment of Japan's economy.
- The bank expanded the band it allows around its long-term yield target at the July MPM. However, long-term JGB yields continue to remain far below the upper bound. We expect this to continue for some time, partly driven by declining global bond yields, but also as market participant doubts about its commitment to supressing yields recede.
- Furthermore, we believe the likelihood of the BoJ further reducing its JGB purchase significantly anytime soon remains limited. We continue to believe the timing of the BoJ's next policy action, raising its long-term yield target by 25bp, will be delayed to sometime in 2H20. Under the new guidance, the bank seems to be very cautious in regards to the next consumption tax hike and is likely unwilling to act until it can fully assess the effects of the next hike on both the economy and prices.
