Bank Of America Securities On Today’s BOJ Decision

Bank of America Securities note that "the BoJ wraps up its two-day monetary policy meeting (MPM) this Thursday, 17 September. We expect the board to keep all key policy targets unchanged. The meeting overall is likely to be a non-event. High frequency indicators show that the economy continues to recover from the COVID-19 shock. Following the bottoming of consumption data in June, production indicators have also started to improve more notably. This will likely prompt the policy board to upgrade its assessment of IP and exports at its upcoming MPM. Overall, the shape of the economic recovery is likely in line with what the board envisioned in July. More importantly, employment and corporate financing have held up well, reflecting aggressive support from the government and BoJ. Inflation is likely to slow in the coming year. But so far, there have been few signs that we are looking at a damaging bout of deflation of the type we saw after the Global Financial Crisis."