19 Jun 2015
BOJ policy unchanged but announces change to procedure – BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, reviews and shares the implications on the financial markets from the procedure changes announced by the BoJ in today’s policy meeting.
Key Quotes
“As was widely expected the BOJ announced an unchanged monetary stance at the end of its meeting today by a vote of 8-1 with Takahide Kuichi continuing to vote against the JPY 80trn increase, instead favouring a smaller JPY 45trn total.”
“The key announcement after the meeting was the changes to procedures around policy meetings. Instead of 14 meetings a year, the BOJ will now only hold 8 – the same number as the FOMC. The semi-annual report on the outlook of the economy and prices will become quarterly – released in January, April, July and October. The report will include each policy board members’ individual forecasts. Finally, a “summary of opinions” expressed at each policy meeting will be released about one week following each monetary policy meeting.”
“The changes are effective from the start of 2016 and were implemented in order to improve the transparency of central bank policy deliberations. The changes mean that the monthly economic assessment report will be scraped, which makes sense given how little an economy tends to change from month to month.”
“The obvious implication for the financial markets of these changes is that it raises the importance of each central bank meeting given there are fewer which means greater chance of volatility around the meetings. As it stands now, market participants tend to look to the end-April and end-October meetings as likely timings of policy changes – especially given each QQE policy announcement came in April and October. From next year we have four meetings per year that markets will view as most likely in getting a policy change. Again this is similar to the US.”
Key Quotes
“As was widely expected the BOJ announced an unchanged monetary stance at the end of its meeting today by a vote of 8-1 with Takahide Kuichi continuing to vote against the JPY 80trn increase, instead favouring a smaller JPY 45trn total.”
“The key announcement after the meeting was the changes to procedures around policy meetings. Instead of 14 meetings a year, the BOJ will now only hold 8 – the same number as the FOMC. The semi-annual report on the outlook of the economy and prices will become quarterly – released in January, April, July and October. The report will include each policy board members’ individual forecasts. Finally, a “summary of opinions” expressed at each policy meeting will be released about one week following each monetary policy meeting.”
“The changes are effective from the start of 2016 and were implemented in order to improve the transparency of central bank policy deliberations. The changes mean that the monthly economic assessment report will be scraped, which makes sense given how little an economy tends to change from month to month.”
“The obvious implication for the financial markets of these changes is that it raises the importance of each central bank meeting given there are fewer which means greater chance of volatility around the meetings. As it stands now, market participants tend to look to the end-April and end-October meetings as likely timings of policy changes – especially given each QQE policy announcement came in April and October. From next year we have four meetings per year that markets will view as most likely in getting a policy change. Again this is similar to the US.”