Barclays believe that "as the actual CPI...>

BOJ VIEW: Barclays believe that "as the actual CPI gets closer to the target the

BOJ is likely to incrementally modify the rate targets in its YCC policy (by

broadening the allowable rate band), but stagnation in CPI inflation should

remain a constraint on normalization. Over the longer term, however, it seems

likely that its YCC policy will be diluted, similar to how quantitative easing

(QE) is already in the process of "stealth" tapering. Because the latest policy

decision makes it likely that the BOJ will keep its long-term rate target at the

current +/-0 % throughout FY18-19, we have likewise modified our monetary policy

outlook. This does not necessarily change the longer-term trend toward

normalization, however. We expect the BOJ's allowable band for the long-term

rate (changed from 0%+/-10bp to +/-20bp) to be gradually widened as YCC loses

its bite."