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MNI BoJ Preview - September 2021: Move Along

Placeholder meeting. Looking ahead, politics dominate headlines but shouldn't meaningfully impact BoJ.

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EXECUTIVE SUMMARY

  • The Bank of Japan is expected to leave its monetary policy settings unchanged come the end of its September meeting. The Bank will likely be comfortable with market gyrations when it comes to benchmark JGB yields, although benchmark 10-Year cash JGBs have failed to trade in several sessions in recent months.
  • Downside risks to the economy stemming from COVID, namely on the services, industrial production and export fronts, may create a slightly more negative tone when it comes to the BoJ's overarching economic message, with the questions surrounding the health of the Chinese economy also providing the potential for a sombre economic take. Still, the lack of fresh economic projections means that it should be a fairly bland affair on this front.
  • Looking ahead, the political dynamic in Japan isn't expected to impact the BoJ as we move through the tail end of '21, with the ruling LDP Party set to hold a leadership vote in the coming weeks, which will be followed up by a general election. The political question obviously consists of many ifs and buts and is not something that the BoJ will want to address.

Click to view the full preview: MNI BoJ Preview Sep 2021.pdf