REPEAT: POV: ALL EYES ON THE YCC - This.........>

BOJ: REPEAT: POV: ALL EYES ON THE YCC

- This week's BOJ decision has turned into a meeting that could have global

implications, after being viewed as a non-event just a couple of weeks ago.

- This comes after a raft of source reports suggested that the BOJ could adjust

its MonPol settings, through an ETF purchase tweak, the removal of

pre-announcements re: Rinban or even an alteration to Yield Curve Control (YCC).

- The MNI policy team has highlighted that the Bank's inflation expectations are

likely to be lowered, with a focus on structural issues.

- Central scenario: No change to policy, but discussions surrounding YCC

alongside a downgrade in inflation forecasts.

- Hawkish: Changes to the BOJ's YCC policy resulting in a steeper curve/higher

10-Yr yield. This would likely be accompanied by rhetoric designed to temper mkt

reaction e.g. emphasising that the move is not the first step towards QQE exit.

- Dovish: No change to policy outside of the possible ETF re-allocation, with a

dovish communique focusing on the downgrade to the Bank's inflation outlook and

pointing to the recent rounds of fixed-rate operations in 10-Year JGBs.