Preview of the Bank of Japan meeting, via Scotia. This in summary from a much longer piece:
- No change in the target rate of 0.1% is expected
- Forecast updates will be delivered with this decision and could be key in terms of further informing market pricing for roughly an additional 20bps of tightening later this year.
- An added key could be guidance on whether and when to begin shrinking the size of the BoJ’s massive balance sheet after ending yield curve control at the last meeting.
Scotia point to new developments since the last full forecast meeting in January (the BOJ changed policy at the March meeting):
- Spring Shunto union wage negotiations set wage hikes at the fastest in decades
- oil prices have moved higher
- the yen has depreciated by about another 4% to the USD since January
- core inflation has been sharply waning
And conclude:
- Ueda is unlikely to guide future actions at this meeting ... as further evidence is gathered
- Still, its last forecast of 2.4% core inflation this year and 1.8% next year might be revised higher with somewhat further confidence toward durably achieving 2%.
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The Bank of Japan decision is due on Friday 26 April some time around 0230 to 0330 GMT (Thursday evening US time 2230 - 2330). The BOJ doesn';t schedule an exact time for the release.
