2 May 2016
BoJ will ease further - Westpac
Robert Rennie, Research Analyst at Westpac, suggests that the recent run of data and indeed latest BoJ Outlook forecasts fully justified another round of QE in his view.
Key Quotes
“Given a move back into deflation seen in March data, FY16 inflation forecast revised down to 0.5% from 0.8% in Jan and 1.4% in October, and forecasts for 2% inflation being reached some time in FY 2017 (from first half FY17 in January and second half FY16 in October) then I remain confused as to why the BoJ did not ease.
Kuroda’s press conference has failed to alleviate that confusion. I remain of the view that the BoJ will ease further, though we may have to wait until July for that move to eventuate. The risks of a test and break of recent lows seems very real. We shift to negative bias, slash our 1 month target to 108 and revise down our 3 month range to 103/115.”
Key Quotes
“Given a move back into deflation seen in March data, FY16 inflation forecast revised down to 0.5% from 0.8% in Jan and 1.4% in October, and forecasts for 2% inflation being reached some time in FY 2017 (from first half FY17 in January and second half FY16 in October) then I remain confused as to why the BoJ did not ease.
Kuroda’s press conference has failed to alleviate that confusion. I remain of the view that the BoJ will ease further, though we may have to wait until July for that move to eventuate. The risks of a test and break of recent lows seems very real. We shift to negative bias, slash our 1 month target to 108 and revise down our 3 month range to 103/115.”