WHAT WILL BOJ DO; SAME AS ALL OTHER CENTRAL BANKS – TIGHTEN TIGHTEN AND TIGHTEN.
Bank of Japan Governor Haruhiko Kuroda faces a communication challenge: expressing his usual confidence that inflation is headed to the central bank’s target while cooling speculation that the first step in normalizing policy is nearing.
After a two-day policy meeting ends Tuesday, investors are sure to scrutinize Kuroda’s words and the latest price and economic growth forecasts for signs that the BOJ is closer to joining its global peers in dialing back its ultra-loose monetary policy.
- The issue is not the monetary policy but is about Kuroda – will he stay as the Governor (which we believe he will so that it won’t shake a good sailing ship.)
- BOJ already started its winding down of ETF and Bonds purchases and we believe today they will further cut buying of ETF & Bonds.
- BOJ is very comfortable for JPY staying at 100 – 105 vs. the USD so we believe they will make their move this year together with their close partner FED.
- We maintain SELL for USDJPY.
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