25 Apr 2016
BoJ expected to wait to see more evidence before firing again – Deutsche Bank
Research Team at Deutsche Bank, suggests that the BoJ meeting on Thursday could have been a bigger deal a couple of weeks ago when global markets were seeing renewed weakness.
Key Quotes
“However since April 8th the Nikkei is up 13% and this means further action now is finely balanced. We're also pretty much back to levels seen just before they cut rates into negative territory back at the end of January.
Given the initial negative reaction to this base rate cut, the BoJ may wait to see more evidence as to the impact of this momentous move before calibrating policy further. They have a little breathing space for now but it feels to us that they will have to go even more unorthodox before too long in terms of policy. The consensus (as polled on Bloomberg 15-21 April) is fairly split on whether they'll act this Thursday with a narrow majority (23 out of 41 economists) expecting further easing although 90% expect action by July. 19 expect an increase in ETF buying, with 8 expecting additional bond buying and the same number expecting a further cut in rates.
Obviously some of these expect a combination of the above but 18 expect no new policy moves. There has also been some talk (after this polling) of the BoJ helping financials lend by offering negative borrowing costs on selected loans - a bit like that seen from the ECB in March. So all eyes on Thursday to see if they're yet ready to try to ease the pressure on banks that their January cut created.”
Key Quotes
“However since April 8th the Nikkei is up 13% and this means further action now is finely balanced. We're also pretty much back to levels seen just before they cut rates into negative territory back at the end of January.
Given the initial negative reaction to this base rate cut, the BoJ may wait to see more evidence as to the impact of this momentous move before calibrating policy further. They have a little breathing space for now but it feels to us that they will have to go even more unorthodox before too long in terms of policy. The consensus (as polled on Bloomberg 15-21 April) is fairly split on whether they'll act this Thursday with a narrow majority (23 out of 41 economists) expecting further easing although 90% expect action by July. 19 expect an increase in ETF buying, with 8 expecting additional bond buying and the same number expecting a further cut in rates.
Obviously some of these expect a combination of the above but 18 expect no new policy moves. There has also been some talk (after this polling) of the BoJ helping financials lend by offering negative borrowing costs on selected loans - a bit like that seen from the ECB in March. So all eyes on Thursday to see if they're yet ready to try to ease the pressure on banks that their January cut created.”