MNI BoJ Review - June 2021: Background Tweaks, But No Surprises

Executive Summary

• The Bank left its broader monetary policy settings unchanged, as expected, with some tweaks to some of the more nuanced areas of its policy toolkit.
• Board member Kataoka injected his now standard round of dovish dissenting votes.
• Ultimately, outside of some peripheral changes the Bank is effectively on hold for the foreseeable as it looks to flame the inflationary embers as Japan continues to battle its well documented disinflationary forces.

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MNI BoJ Review Jun 2021.pdf

The Bank left its broader monetary policy settings unchanged, as expected.

Board member Kataoka injected his now standard round of dovish dissenting votes.

Elsewhere, the Bank extended the life of its Special Funds Supplying Operations to Facilitate Financing in Response to COVID-19 by 6 months through the end of March '22, as expected.

It was later confirmed that board member Masai choose to act on her right to abstain during the voting process given her impending departure from the Board (her term concludes on 29 June)

The Bank noted that it will outline a new fund provisioning measure surrounding climate change at its July meeting, which will succeed the existing fund provisioning measure to support strengthening the foundations for economic growth (which will still see out its previously outlined lifespan). This wasn't a source of real surprise given some of the recent rhetoric deployed by board members re: climate change.

Governor Kuroda's press conference didn't present anything in the way of notable surprises, with several matters of fact statements surrounding the impact of the U.S. Federal Reserve's monetary policy settings/outlook on the JPY and JGB yields.

Ultimately, outside of some peripheral changes the Bank is effectively on hold for the foreseeable as it looks to flame the inflationary embers as Japan continues to battle its well documented disinflationary forces.