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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessBoJ Preview - July 2020: All Quiet On The Eastern Front
MNI Point of View:
The upcoming Bank of Japan (BoJ) meeting should come and go without much of a fuss. Broad expectations look for the Bank to leave its policy settings unchanged, as it remains alert to the "severe" downside risks surrounding the economy, but still expects a pickup in activity as we move through the remainder of the year.
Recent rhetoric, both from Governor Kuroda and from the summary of opinions of June's monetary policy decision, point to the Bank adopting a wait and see approach, with the methods deployed in recent months expected to do the heavy lifting.
On forward guidance, the Bank should reiterate that "for the time being, the Bank will closely monitor the impact of COVID-19 and will not hesitate to take additional easing measures if necessary, and also it expects short- and long-term policy interest rates to remain at their present or lower levels."
The Bank will release its latest round of economic projections, and should revert to the typical point-based estimates this time out, as opposed to the estimate bands that were introduced in April's Outlook for Economic Activity and Prices, which were a product of the uncertainty surrounding the outbreak and spread of COVID-19.
Scenario Analysis:
Base Case: No change to the Bank's monetary policy settings and forward guidance, with '20 GDP expectations pegged towards the lower end of the range that the Bank outlined in April.
Dovish Case: Little scope for an outright dovish surprise, given the recent Bank communique. Perhaps a dovish tweak to the forward guidance or a GDP outlook that is towards the bottom of the outlined range for the current year, coupled with a softer than expected GDP projection for the following year.
Hawkish Case: Once again, it really is all about the forecasts, given Governor Kuroda's recent run of rhetoric. No real space for an outright hawkish surprise, with any hint of a glass half-full approach/greater focus on the recovery providing the only realistic sources of a hawkish tinge.
Click here for the full BoJ Previewor see attached below:
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.