BOJ Governor Kuroda’s dovish stance remains intact - Nomura

BOJ Governor Kuroda’s dovish stance remained intact during Thursday's press conference, notes the Economics Team at Nomura. 

Key Quotes

Although he repeated that the “reversal rate” was interesting academic research, he judged financial intermediation is not impaired in Japan. Discussions on the reversal rate are very unlikely to lead to policy changes anytime soon.

He also stated that the BOJ’s main goal is to achieve its 2% price target, denying rate rises just because the economy is good.

There will be two more meetings under the current BOJ leadership, and the BOJ is very likely to remain quiet based on Governor Kuroda’s dovish stance.

If overseas central banks become more hawkish in Q1, we believe monetary policy divergence will keep widening, likely weakening JPY.

We see 4 obstacles for the BoJ to overcome before finally embarking on monetary policy normalisation: 1) the BOJ’s leadership appointment; 2) the spring wage negotiations; 3) the LDP leadership election and 4) the likely final decision on the September 2019 sales tax hike.