MNI BoJ Review - March 2023: No Surprises As The Baton Is Passed

EXECUTIVE SUMMARY

• Outgoing Governor Kuroda met the wider consensus view as he chose not to tweak policy settings at his final monetary policy meeting atop the central bank. The post-meeting statement was mostly a copy and paste exercise, reaffirming the Bank’s overarching view surrounding the economy (albeit with a slight downgrade to its view on exports), alongside a reiteration of its forward guidance. This left the future of monetary policy settings to the incoming leadership, as opposed to making any attempt to deploy the ‘transition-smoothing’ tweaks that some had called for.
• Ultimately, we don’t expect any change at the Bank’s April meeting, which will see Kazuo Ueda preside over matters for the first time. Still, that event may be used to signal a wider review of the BoJ’s monetary policy framework, as well as a formal rethink of the inflation accord struck between the Bank and the government (with the potential for a tweak to the wording of the timeframe surrounding the Bank’s inflation target, as opposed to the numerical 2% inflation goal itself).
• These steps would be deemed hawkish and would likely pave the way for a further tweak of the BoJ’s monetary policy settings in the months that follow.
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