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MNI BoJ Preview - September 2022: An Unenviable Task

The BoJ faces a difficult trade off as the last reamining dove in the global central banking sphere.

EXECUTIVE SUMMARY

  • The BoJ is set to reaffirm its current benchmark monetary policy settings at the end of its September meeting, even as foreign investors are seemingly looking to force the Bank into adjusting its Yield Curve Control (YCC) settings with 10-Year JGB yields test the upper boundary of the Bank’s permitted trading band. 20+-Year JGB yields have already registered fresh cycle highs during the latest round of JGB weakness.
  • There has been some speculation that the BoJ could remove the "or lower" reference in its forward guidance, but we do not think such a move will be forthcoming this time out.
  • The BoJ faces an interesting set of challenges , with the government clearly wanting to fend off further JPY weakness. We think Governor Kuroda will highlight the demerits of the recent run of JPY weakness when questioned on the matter.
  • Click to view full preview:MNI BoJ Preview - Sep 2022.pdf
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EXECUTIVE SUMMARY

  • The BoJ is set to reaffirm its current benchmark monetary policy settings at the end of its September meeting, even as foreign investors are seemingly looking to force the Bank into adjusting its Yield Curve Control (YCC) settings with 10-Year JGB yields test the upper boundary of the Bank’s permitted trading band. 20+-Year JGB yields have already registered fresh cycle highs during the latest round of JGB weakness.
  • There has been some speculation that the BoJ could remove the "or lower" reference in its forward guidance, but we do not think such a move will be forthcoming this time out.
  • The BoJ faces an interesting set of challenges , with the government clearly wanting to fend off further JPY weakness. We think Governor Kuroda will highlight the demerits of the recent run of JPY weakness when questioned on the matter.
  • Click to view full preview:MNI BoJ Preview - Sep 2022.pdf