MNI BoJ Review - April 2023: Guidance Tweaks & A Deeper Review

EXECUTIVE SUMMARY

• The BoJ left its major monetary policy levers unchanged at the end of Governor Ueda’s first meeting atop the central bank, as was widely expected, although made a more forceful tweak to its forward guidance than many expected.
• The Bank also launched a wider review of the ultra-loose monetary policy settings deployed since the 1990s. The post-meeting statement revealed that the review will likely take 1-1.5 years to complete, which left many market participants pointing to a distinctly dovish outcome, although Ueda overrode that feeling.
• Ultimately, the growing inflationary pressure in Japan (as most recently evidenced by Friday’s Tokyo CPI release, which crossed ahead of the BoJ decision, comfortably topping expectations across all 3 major metrics) leaves a relatively near-term tweak to YCC on the table. We still point to July’s meeting as a more likely staging post than June for that move, if it is forthcoming, as the release of the Bank’s next outlook report provides a bed for a more thorough round of explanation.
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BOJ Review - April 2023.pdf