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MNI BOJ WATCH: Yield Curve Control On Hold, October In Focus

(MNI) Tokyo
(MNI) TOKYO

The Bank of Japan is likely to keep its yield curve control settings unchanged next week.

The Bank of Japan is likely to maintain its yield curve control policy unaltered when it meets on Sept 21-22 as the economy and prices move in line with forecasts, however its focus will shift to upcoming October service price revisions amid persistently high costs.

With officials already envisaging scrapping yield curve control next April should wage gains persist, possibly preceded by an increase in the overnight rate from negative levels, officials are waiting to see whether household inflation expectations ease together with core CPI. For the moment they expect private consumption to continue its moderate recovery path, despite the impact of persistent negative real wages, which has prompted supermarket stores and food service industries to cut some retail prices. (See MNI POLICY: April YCC Removal Window Possible On Wage Data)

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The Bank of Japan is likely to maintain its yield curve control policy unaltered when it meets on Sept 21-22 as the economy and prices move in line with forecasts, however its focus will shift to upcoming October service price revisions amid persistently high costs.

With officials already envisaging scrapping yield curve control next April should wage gains persist, possibly preceded by an increase in the overnight rate from negative levels, officials are waiting to see whether household inflation expectations ease together with core CPI. For the moment they expect private consumption to continue its moderate recovery path, despite the impact of persistent negative real wages, which has prompted supermarket stores and food service industries to cut some retail prices. (See MNI POLICY: April YCC Removal Window Possible On Wage Data)

Keep reading...Show less