BOJ Review: Dovish tone unchanged - Nomura

BOJ Governor Kuroda’s dovish stance remained intact during yesterday’s press conference as he repeated that the Bank is not at a point for considering policy exit, ruling out the possibility of near-term changes in policy rates and ETF purchases, explains the research team at Nomura.

Key Quotes

“Initially, JPY reacted positively to the statement and outlook report, as the BOJ’s assessment on current inflation expectations has improved slightly. However, Governor Kuroda ruled out the possibility of a nominal rate adjustment just because of higher inflation expectations. The BOJ’s unchanged dovish stance should support yen-crosses. The BOJ leadership nomination and wage negotiations will be the next important events for BOJ policymaking, although the BOJ’s dovish stance is likely to continue beyond these events.” 

“The BOJ’s dovish stance to support yen-crosses

• JPY reacted positively initially to the statement and outlook report, as the BOJ’s assessment of current inflation expectations improved slightly. However, Governor Kuroda ruled out the possibility of a nominal rate adjustment just because of higher inflation expectations. As he reiterated the Bank is still not at a point for considering policy exit, the risk of near-term policy change remains very low. The BOJ’s unchanged dovish stance should support yen-crosses.
• He refused to make comments on the BOJ leadership nomination, while the nomination will be the next important BOJ event. On the wage negotiations, Governor Kuroda said pressure for wage rises is increasing steadily, while stating “without wages, there is no price rises, and vice-versa.” The forthcoming wage negotiation results will also be important for the monetary policy stance into the H2 this year.”