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11 Mar 2014
Flash: BOJ set to keep policy unchanged - Nomura
FXStreet (Bali) - According to Yujiro Goto, FX Strategist at Nomura, the BOJ looks set to keep policy unchanged today.
Key Quotes
"Inflation momentum remains strong and core inflation stayed at 1.3% in January. The first estimate of Q4 GDP was weaker than we expected, and we think a small downgrade to the GDP growth forecast is likely next Monday. However, at the February meeting the BOJ kept its optimistic view on the economy despite the first estimate of Q4 GDP. Thus, we judge the expected weaker GDP number on Monday is unlikely to lead to easing by the BOJ at this point. The BOJ is also unlikely to present its schedule of asset purchases by end-2015 at this point but, if asked at the press conference, BOJ Governor Kuroda will likely emphasise the open-endedness of the QQE programme."
"Market expectations for near-term easing by the BOJ declined further in March, according to JCER. Even though the BOJ’s optimistic view on inflation momentum is unlikely to change, we should closely monitor its view on exports and capex. Exports were weak in Q4 and the weakness continued in January, while Q4 business investment is very likely to be downgraded on Monday. Because of the scheduled consumption tax hike in April, it is difficult to judge economic momentum from household consumption and housing investment. Exports and capex are less influenced by tax changes and are better indicators of economic momentum for policymakers for now. Possible downgrades to the exports and capex outlook would increase expectations of BOJ easing again, although we think the Bank is likely to wait for the February trade number scheduled on 19 March before downgrading its exports assessment."
Key Quotes
"Inflation momentum remains strong and core inflation stayed at 1.3% in January. The first estimate of Q4 GDP was weaker than we expected, and we think a small downgrade to the GDP growth forecast is likely next Monday. However, at the February meeting the BOJ kept its optimistic view on the economy despite the first estimate of Q4 GDP. Thus, we judge the expected weaker GDP number on Monday is unlikely to lead to easing by the BOJ at this point. The BOJ is also unlikely to present its schedule of asset purchases by end-2015 at this point but, if asked at the press conference, BOJ Governor Kuroda will likely emphasise the open-endedness of the QQE programme."
"Market expectations for near-term easing by the BOJ declined further in March, according to JCER. Even though the BOJ’s optimistic view on inflation momentum is unlikely to change, we should closely monitor its view on exports and capex. Exports were weak in Q4 and the weakness continued in January, while Q4 business investment is very likely to be downgraded on Monday. Because of the scheduled consumption tax hike in April, it is difficult to judge economic momentum from household consumption and housing investment. Exports and capex are less influenced by tax changes and are better indicators of economic momentum for policymakers for now. Possible downgrades to the exports and capex outlook would increase expectations of BOJ easing again, although we think the Bank is likely to wait for the February trade number scheduled on 19 March before downgrading its exports assessment."