BoJ: No immediate change to the QQE programme expected – Societe Generale

Analysts at Societe Generale offer a sneak peek at what to expect from the Bank of Japan (BoJ) monetary policy announcement and outlook report due tomorrow after 0230 GMT.

Key Quotes:

“The BoJ's meeting on 31 July will be unusually closely observed by the markets in the wake of this week's large move in the 10y JGB yield. Monday's move in JGBs (close to 10bp in the 10y yield) was likely a knee-jerk reaction to speculation that the BoJ may start to alter its yield curve control (YCC) strategy this year. 

Our economists do not see an immediate change to the QQE programme with inflation still relatively low and a possible downgrade in the BoJ's inflation projections. … the BoJ could add some flexibility to YCC by increasing the band it is willing to accept around its long-term yield target (currently, around 10bp seems to be acceptable). This would aim to ease some of the side effects of low yields and a flat yield curve on the banking sector.“