The Bank of Japan meets on July 27 and 28. MUFG is not expecting any policy change or tweak to YCC at this meeting.
But they do acknowledge muddled messaging from the BOJ. While Bank of Japan Governor Ueda said in Portugal at the European Central Bank's forum in Sintra that the BOJ would not be changing policy until it became "reasonably sure" that inflation would accelerate into 2024, MUFG say:
- "It's kind of unclear what the BOJ is waiting for before they decide to tweak YCC. It seems the most important factor is the BOJ's confidence in the future path for prices, but it's vague. We can't quantify their confidence level. There's no scale."
Meanwhile USD/JPY has risen today, even as yields on JGBs climb after Friday's wages data rose its quickest in 3 decades, albeit still slower than inflation.
