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26 Apr 2016
JPY: Souring inflation view to prompt BoJ response – ANZ
Tom Kenny, Research Analyst at ANZ, suggests that the BoJ meets this week with analysts divided on whether or not more easing will be delivered.
Key Quotes
“The BoJ looks set to ease policy this week as the inflation outlook in Japan has deteriorated in recent months.
All options appear to be on the table, including more asset purchases as well as taking the discount rate further negative.
The BoJ is also said to be looking at a measure aimed at ameliorating the impact of further easing on banks’ profits.
In our opinion, the poor inflation dynamics will result in the BoJ downgrading its inflation forecasts and pushing back when it expects to achieve it 2% target. This should elicit further easing.
We expect additional easing to be in the shape of more asset purchases (JGBs and ETFs) and a further cut to the negative deposit rate. The BoJ is said to be considering a measure to alleviate the pressure on bank profitability from negative rates and a flatter yield curve. Specifically, the BoJ is said to be considering subsidising financial institutions that borrow funds under its ‘Stimulating Bank Lending Facility’.”
Key Quotes
“The BoJ looks set to ease policy this week as the inflation outlook in Japan has deteriorated in recent months.
All options appear to be on the table, including more asset purchases as well as taking the discount rate further negative.
The BoJ is also said to be looking at a measure aimed at ameliorating the impact of further easing on banks’ profits.
In our opinion, the poor inflation dynamics will result in the BoJ downgrading its inflation forecasts and pushing back when it expects to achieve it 2% target. This should elicit further easing.
We expect additional easing to be in the shape of more asset purchases (JGBs and ETFs) and a further cut to the negative deposit rate. The BoJ is said to be considering a measure to alleviate the pressure on bank profitability from negative rates and a flatter yield curve. Specifically, the BoJ is said to be considering subsidising financial institutions that borrow funds under its ‘Stimulating Bank Lending Facility’.”