We do not expect any change in stance from the Bank of Japan at its latest monetary policy meeting. Despite its attempts to control the yield curve, domestic economy fundamentals and inflation still need to improve.
While the Bank of Japan's ultra-loose monetary policy cannot last forever, we don’t expect any changes to be announced at its upcoming meeting. The bank will likely maintain negative rates and keep buying bonds to push inflation closer to its 2 per cent target.
We expect BOJ Governor Kuroda to announce no new actions at this week’s meeting in Japan. Yet although he remains upbeat about inflation expectations, the central bank will need to pave the way for future yield-target adjustments if inflation disappoints as US rates rise.