BNPP forecasts a move from the Bank of Japan (BoJ) to adjust the Yield Curve Control (YCC) range for the 10-year rate to ±1% in its 27-28 July meeting.
While the BoJ might present this decision as a measure to manage risks related to financial intermediation and not as a sign of monetary tightening, BNPP identifies other influencing factors.
Key Points:
1. YCC Band Adjustment: BNPP anticipates the BoJ will increase the YCC range for the 10-year rate to ±1% in its imminent meeting.
2. Boys justification: The central bank is expected to attribute this change to mitigating risks associated with financial intermediation, emphasizing that it isn't a shift towards monetary tightening, especially given the recent rise in inflation expectations.
3. Underlying Reasons: BNPP perceives the primary motivations for this decision to be the BoJ's concerns regarding further potential depreciation of the yen and evolving inflation expectations.
This summary is via the folks at eFX.
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