16 Feb 2015
Kuroda’s view on Yen unlikely to change - Nomura
FXStreet (Bali) - According to Nomura, Governor Kuroda is expected to maintain his view on JPY at this week's policy meeting, adding that such unchanged view will likely be viewed as USD/JPY positive.
Key Quotes
"The BOJ is expected to keep its policy unchanged at this week’s meeting (17-18 February). Actual inflation continues to decline, owing to lower energy prices, but inflation expectations among households in January were largely unchanged from a month earlier."
"Private forecasters continue to lower their inflation forecasts for FY2015, but the BOJ is likely to maintain its positive assessment on inflation expectations. No BOJ watchers expect the BOJ to ease at February and March’s meetings and expectations for an April easing have declined slightly from a month ago, according to JCER. Thus, the negative impact of the decision on USD/JPY should be limited."
"Even though the decision is unlikely to move USD/JPY much, Governor Kuroda's press conference will be important for USD/JPY. Bloomberg and WSJ reported that some BOJ officials are now concerned about the negative effects of JPY weakness on consumer sentiment, seeing a possible adverse impact of further easing on the economy. One of the BOJ board members, Mr. Morimoto, shared a similar view in his speech on 9 February and thus, it is not necessarily new that some BOJ board members may see more of a negative impact from further easing on the economy than a positive one."
"In fact, four board members dissented from the decision to provide further stimulus. Governor Kuroda's press conference will show whether the core BOJ members are inclined to see a bigger negative impact of JPY weakness on the economy."
"We expect Governor Kuroda to maintain his view on JPY. He said on 9 February that "I do not think [a] weakening yen so far has caused problems for Japan’s economy overall after it corrected from excessive gains." Thus, he is likely to repeat his balanced view on JPY weakness, suggesting both positive and negative effects on the economy. In terms of further easing, Governor Kuroda is likely to repeat that the Bank will take action without hesitation if it judges that inflation is not moving towards its goal. After media reports on possible changes in the BOJ's stance on JPY weakness and further stimulus, an unchanged view from Governor Kuroda will likely be viewed as USD/JPY positive.
Key Quotes
"The BOJ is expected to keep its policy unchanged at this week’s meeting (17-18 February). Actual inflation continues to decline, owing to lower energy prices, but inflation expectations among households in January were largely unchanged from a month earlier."
"Private forecasters continue to lower their inflation forecasts for FY2015, but the BOJ is likely to maintain its positive assessment on inflation expectations. No BOJ watchers expect the BOJ to ease at February and March’s meetings and expectations for an April easing have declined slightly from a month ago, according to JCER. Thus, the negative impact of the decision on USD/JPY should be limited."
"Even though the decision is unlikely to move USD/JPY much, Governor Kuroda's press conference will be important for USD/JPY. Bloomberg and WSJ reported that some BOJ officials are now concerned about the negative effects of JPY weakness on consumer sentiment, seeing a possible adverse impact of further easing on the economy. One of the BOJ board members, Mr. Morimoto, shared a similar view in his speech on 9 February and thus, it is not necessarily new that some BOJ board members may see more of a negative impact from further easing on the economy than a positive one."
"In fact, four board members dissented from the decision to provide further stimulus. Governor Kuroda's press conference will show whether the core BOJ members are inclined to see a bigger negative impact of JPY weakness on the economy."
"We expect Governor Kuroda to maintain his view on JPY. He said on 9 February that "I do not think [a] weakening yen so far has caused problems for Japan’s economy overall after it corrected from excessive gains." Thus, he is likely to repeat his balanced view on JPY weakness, suggesting both positive and negative effects on the economy. In terms of further easing, Governor Kuroda is likely to repeat that the Bank will take action without hesitation if it judges that inflation is not moving towards its goal. After media reports on possible changes in the BOJ's stance on JPY weakness and further stimulus, an unchanged view from Governor Kuroda will likely be viewed as USD/JPY positive.