20 Feb 2015
BoJ expected to see through near-term weakness in inflation – BNPP
FXStreet (Barcelona) - The Research Team at BNP Paribas, views that the BoJ might see through the near-term weakness of inflation and only act if inflation fails to pick up in H2 2015.
Key Quotes
“Our view remains that the Bank of Japan (BoJ) is prepared to see through the near-term weakness of inflation and Governor Haruhiko Kuroda’s press conference after the meeting sounded broadly consistent with that view. There is no political pressure on the BoJ either.”
“The government does not want more yen depreciation and is no longer asking the BoJ to achieve 2% inflation at the earliest opportunity.”
“That said, if the inflation rate does not start to pick up in H2, as the BoJ (and we) expect, it may feel obliged to act at some point.”
“In that case, because of the feasibility issue in upping the pace of JGB purchases, the Bank could return to an interest-rate targeting regime, but this time focusing on the long-term rate, rather than the overnight call rate.”
Key Quotes
“Our view remains that the Bank of Japan (BoJ) is prepared to see through the near-term weakness of inflation and Governor Haruhiko Kuroda’s press conference after the meeting sounded broadly consistent with that view. There is no political pressure on the BoJ either.”
“The government does not want more yen depreciation and is no longer asking the BoJ to achieve 2% inflation at the earliest opportunity.”
“That said, if the inflation rate does not start to pick up in H2, as the BoJ (and we) expect, it may feel obliged to act at some point.”
“In that case, because of the feasibility issue in upping the pace of JGB purchases, the Bank could return to an interest-rate targeting regime, but this time focusing on the long-term rate, rather than the overnight call rate.”