MNI BoJ Preview - April 2023: No Change, But A Possible Assessment Of Longer Term Settings

EXECUTIVE SUMMARY

• We lean heavily towards the consensus no change view when it comes to the BoJ’s major policy parameters at the end of Governor Ueda’s first meeting atop the central bank. This is owing to the relatively short period of time that has elapsed since Ueda took up his new post, existing BoJ forward guidance, the underlying BoJ view on inflation and continued jitters surrounding the U.S. banking sector. There may be a tweak to the forward guidance, removing the reference to COVID-19, but that shouldn’t be viewed as substantial, if it is indeed forthcoming.
• When it comes to the next YCC tweak (we flag July’s meeting as a potential staging post for that event, given that it will coincide with the release of the next outlook report, although many on the sell-side favour June) we shouldn’t necessarily expect overt signalling ahead of time, with Ueda already revealing that he is open to the idea of deploying a surprise policy move in certain instances.
• We should probably expect Ueda to be a little more balanced than his ultra-dovish predecessor in the post-meeting press conference, although his communication to date has generally presented a more dovish outlook than most assumed would be the case when he was nominated for the role. Ueda’s oratory skills were flagged as a major positive by the government, seemingly playing a key part in his nomination.
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