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VIEW: What Is The Sell-Side Saying About The BoJ?

BOJ

We provide a quick round up of some sell-side views re: the BoJ below:

  • Barclays: We still expect the BoJ to revise its yield curve control (YCC) framework by shortening the YCC target from the 10-Year to the 5-Year sector at the September MPM, when the Policy Board is likely to show a less dovish (more neutral) bias with the replacement of outgoing members. We also believe the BoJ could have more flexibility in managing monetary policy at that stage if the ruling LDP secures an independent majority at the upper house election, enabling PM Kishida to diverge more clearly from his predecessor’s focus on ending deflation through monetary easing.
  • Goldman Sachs: We now see a lower incentive for PM Kishida to actively assume the risk of revising monetary policy in a manner that might cause friction with ex-PM Abe’s faction, especially given that the Kishida administration’s approval ratings remain strong. We therefore believe that the possibility of a monetary policy adjustment initiated by the Kishida administration has diminished for now. This would reinforce our long-held view that the BoJ will stick to YCC at least under the remaining tenure of Governor Kuroda until April 2023.
  • ING: We think that any policy tweaks in the near term are not feasible yet, but the likelihood will increase later this year.
  • J.P.Morgan: For now, we don’t expect the BoJ will shift to adjust the YCC, which will deepen its outlier status among DM CBs.
  • TD Securities: there really is limited likelihood that the Bank shifts its stance anytime soon. Higher wage growth may be a game changer, especially if wages increase more than inflation, but real wages are still negative and show little sign of turning positive soon.
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We provide a quick round up of some sell-side views re: the BoJ below:

  • Barclays: We still expect the BoJ to revise its yield curve control (YCC) framework by shortening the YCC target from the 10-Year to the 5-Year sector at the September MPM, when the Policy Board is likely to show a less dovish (more neutral) bias with the replacement of outgoing members. We also believe the BoJ could have more flexibility in managing monetary policy at that stage if the ruling LDP secures an independent majority at the upper house election, enabling PM Kishida to diverge more clearly from his predecessor’s focus on ending deflation through monetary easing.
  • Goldman Sachs: We now see a lower incentive for PM Kishida to actively assume the risk of revising monetary policy in a manner that might cause friction with ex-PM Abe’s faction, especially given that the Kishida administration’s approval ratings remain strong. We therefore believe that the possibility of a monetary policy adjustment initiated by the Kishida administration has diminished for now. This would reinforce our long-held view that the BoJ will stick to YCC at least under the remaining tenure of Governor Kuroda until April 2023.
  • ING: We think that any policy tweaks in the near term are not feasible yet, but the likelihood will increase later this year.
  • J.P.Morgan: For now, we don’t expect the BoJ will shift to adjust the YCC, which will deepen its outlier status among DM CBs.
  • TD Securities: there really is limited likelihood that the Bank shifts its stance anytime soon. Higher wage growth may be a game changer, especially if wages increase more than inflation, but real wages are still negative and show little sign of turning positive soon.