VIEW: Barclays "had previously forecast that....>

BOJ: VIEW: Barclays "had previously forecast that the BoJ would stick with its

current policy stance through FY19-20, but have revised this outlook & now

expect the BoJ to take short-term policy rates (currently -10bp) deeper into

negative territory (to -20bp) at the October MPM. Assuming continued

rate-cutting by the ECB and Fed, we believe the BoJ will then lower rates to

-30bp (which might be viewed as near the "reversal rate") in January 2020 before

leaving them unchanged through end-FY20. We believe the BoJ will need to

introduce measures to mitigate the increase in side effects likely to accompany

NIRP deepening, such as profit deterioration at financial institutions. Its

options might be divided into two categories: measures to directly or indirectly

supplement the income of banks and the more full-fledged measure of revising the

YCC framework to steepen the yield curve. As an initial measure to mitigate the

side effects of NIRP deepening, we believe the BoJ will likely adopt the former,

which could give a short-term boost to the income of banks. Longer term,

however, we believe it will likely shift to the more full-fledged measure of

revising the YCC framework."