BoJ: No fireworks offered – Danske Bank

Analysts at Danske Bank note that the Bank of Japan (BoJ) kept its monetary policy unchanged this morning as widely expected and USD/JPY initially fell 35 pips from 110.90 to 110.65 as the BoJ tweaked its wording on inflation in the outlook report.

Key Quotes

“It was the first time in 14 meetings including the Outlook Report that the BoJ did not revise its inflation forecast lower. We still think the BoJ is too optimistic on inflation however, and that it will have to revise its inflation forecast lower this year. In our main scenario we expect the BoJ to keep its policy unchanged, maintaining the short-term policy interest rate at -0.1% and the 10Y Japanese government bond (JGB) yield at 0% over our 12M fo recast horizon, assuming BoJ governor Haruhiko Kuroda is reappointed when his term ends in April.