BoJ to amend policy after all? - Nomura

Analysts at Nomura explained that with the timeframe for the achievement of the BOJ’s 2% price stability target pushed back again and again and the BOJ maintaining its current monetary easing policy for longer and longer, debate about the possibility that the BOJ might amend its policy has started to surface. 

Key Quotes:

"The longer the BOJ maintains its monetary easing policy, the more people are beginning to become aware of its technical limitations. In addition, the longer the BOJ continues to purchase assets, the greater the negative impact is likely to be on both the value of its JGB holdings and its period earnings when it does exit its current monetary policy."

"In our view, the speech made by BOJ Governor Haruhiko Kuroda on 13 November was ground breaking because he indicated in this speech what the BOJ saw as the natural level for real interest rates and also introduced the concept of the "reversal rate," noting the possibility that the effects of monetary easing could reverse if the BOJ were to lower interest rates too far. Even based on these arguments, we think it extremely unlikely that the BOJ will amend its current policy of QQE with yield curve control."