VIEW: ING: Expect Rates To Stay Unchanged For A While

ING think “Governor Kuroda is trying to pave the way for policy normalisation before stepping down. A policy shift immediately after the leadership change is difficult and could miss the opportune time to end the decades-long ultra-low policy. He may be right that monetary policy should remain accommodative until a stable 2% inflation target is met and that the policy review is not needed in the short term. But, with the YCC tweak, his successor will have more flexibility to deploy monetary policy in the future.”

• “We also expect that the BoJ will maintain its policy balance rate at -0.1% for a while and that the BoJ will take a wait-and-see approach until the next annual wage negotiation season (Shunto) in April/May. However, market participants will likely bet on further tightening, which will likely create market noise that the BoJ did not intend.”