MNI BoJ Preview - April 2021: A Calmer Affair

• April's BoJ decision presents the polar opposite of the March meeting, with no expectations for movement in monetary policy settings. New board member Asahi Noguchi will vote on monetary policy matters for the first time, he sits in the reflationist camp.
• Elsewhere, the Bank will update its economic outlook, and is set to trim its immediate CPI forecast (with forecasts remaining well shy of the desired 2.0% Y/Y level across the forecast horizon). The heightened sense of worry surrounding the local COVID situation (resulting in the declaration of another state of emergency for Tokyo, along with several other prefectures) and the slow domestic vaccination scheme present downside risks to the Bank's expectations surrounding GDP growth, at least in the immediate term, although the BoJ is still expected to nudge its short term GDP growth forecast higher on offshore matters (the current economic projections are outlined below). The mixture of the current local COVID situation and the proximity to March's policy adjustments should mean that the Bank will be more than happy to sit on its hands, especially with USD/JPY & 10-Year JGB yields operating comfortably within the confines of the ranges that are deemed accepted to policymakers (the BoJ outlined its permitted 10-Year JGB yield trading band in March, and the boundaries are yet to be tested).

BOJ Preview Apr 2021.pdf