EUR/JPY: ECB/BoJ policies to be supportive in H2? - Nomura

In respect to EUR/JPY, BoJ & ECB, analysts at Nomura expect the ECB to take further normalisation steps in H2 this year. 

Key Quotes:

"The recovery in inflation and technical difficulties to maintaining its QE programme, both encourage the ECB to unwind monetary policy accommodation. In contrast, a much weaker recovery in Japanese inflation suggests the BOJ is unlikely to follow the ECB’s normalisation path anytime soon."

"Our economists judge the ECB normalization will have limited impact on BOJ’s monetary policy."

"There are challenges for both the ECB and BOJ, and in the near term, recent weakness in global inflation momentum can be major obstacles for central banks."

"Nonetheless, the difference in policy stances between the ECB and BOJ will be much clearer into H2 this year, which should support EUR/JPY appreciation trend."