MNI BoJ Review - January 2023: Sticking, For Now

EXECUTIVE SUMMARY

• The BoJ stuck to its guns at its January monetary policy meeting, leaving its headline monetary policy settings unchanged. Although most of the sell-side looked for no change in YCC settings (albeit with varying degrees of conviction), press speculation had triggered the idea that the BoJ may have been viewing its current policy settings as untenable, given potential side effects. As such, markets were much more aggressive when it came to pricing the potential of another widening of the YCC band (or removal of YCC altogether).
• The Bank clearly doesn’t want to be bullied into tweaking/abandoning YCC. This resulted in some subtle adjustments to the Bank’s provisions surrounding its fund supplying operations against pooled collateral.
• The last few months of Kuroda’s tenure are set to be anything but smooth.
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BOJ Review - January 2023.pdf