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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 Review - July 2020: No Change, Caution Remains
MNI Point of View:
This decision held nothing in the way of surprises, with the Bank leaving its monetary policy settings unchanged, matching universal expectations and falling in line with guidance from the Bank ahead of time.
The Bank also re-affirmed its official forward guidance, noting that: "For the time being, the Bank will closely monitor the impact of the novel coronavirus (COVID19) 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."
In terms of the voting breakdown, newcomer Nakamura voted in line with the majority, as expected, while serial dissenter/reflationist Kataoka took two familiar lines of dissent, as was widely expected:
"Mr. Kataoka dissented, considering that it was desirable to further strengthen monetary easing by lowering shortand long-term interest rates, in response to a possible increase in downward pressure on prices and with the aim of alleviating firms' and households' interest burden. Mr. Kataoka dissented, considering that, given the severe impact of COVID-19, further coordination of fiscal and monetary policy was necessary and it was appropriate for the Bank to revise the forward guidance for the policy rates to relate it to the price stability target."
In terms of the economic outlook, the Bank noted that "Japan's economy has been in an extremely severe situation with the impact of COVID-19 remaining at home and abroad, although economic activity has resumed gradually."
The forecast for FY2020 GDP growth was in the lower end of the range of estimates provided back in April (with the range shifted lower), as expected, with little to note across the broader suite of economic projections.
All in all, nothing really changed this time out, with the Bank still ready to act again, if required. Ultimately, BoJ policy has been operating in close proximity to its limits for several years, unable to fire up inflationary pressure. COVID-19 presents the latest challenge for the Bank to deal with. Still, Governor Kuroda once again noted that he sees no value in lowering/altering the BoJ's inflation goal.
Click here for the full BoJ Reviewor 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.