### POV: Market Dynamics Provide The BoJ With...>

BOJ: ### POV: Market Dynamics Provide The BoJ With Some Time

- Mkt dynamics owing to an upturn in perceptions surrounding the Sino-U.S. trade

war, coupled with a key interview with BoJ Gov Kuroda, released Sep 6, have

provided the BoJ with some breathing room ahead of the MonPol decision. Kuroda

reiterated the 4 prev. outlined areas that could be used to deepen monetary

easing & also pointed to a ltd tolerance re: 10-Year JGB yields < -0.2%, as well

as noting that 20- & 30-Year yields had "fallen a bit too far." 10-Year JGB

yields operated < the BoJ's perceived line in the sand of -0.2% between Aug 9 &

Sep 11, but have stabilised > -0.2% in recent days. Inflationary pressures

remain ltd, at best, with the BoJ wary of using its remaining powder ahead of

the scheduled sales tax hike & with uncertainty still surrounding the Sino-U.S.

trade war. It is also cognisant of the side-effects of looser policy.

- Base Case: MonPol settings unch. & stronger fwd guidance, willing to let 10-Yr

yields move in line with broader mkt dynamics to a degree, but with tolerance.

- Dovish risk: BoJ feels pressured to act on the back of global MonPol Easing.

- Hawkish risk: Little in the way of scope for an outright hawkish surprise.