Japan: Additional monetary easing might be implemented in October 2015 - Nomura

FXStreet (Barcelona) - Japan Economists at Nomura, expect additional monetary easing in Japan in the form of increased JGB purchases in October 2015, tapering from October 2016.

Key Quotes

“We have attempted to estimate the extent to which the major categories of investors will be able to reduce their holdings of long-term JGBs over the three-year period of FY15–17, based on certain assumptions, and have made the following changes to our forecasts for BOJ monetary policy on the basis of these estimates.”

“We expect additional monetary easing to be implemented in October 2015. We have raised our forecasts from ¥80trn to ¥90trn for the BOJ's annual JGB purchases and from ¥3trn to ¥6trn for its annual equity ETF purchases. (Up to now, we merely said that we thought the BOJ was looking into stepping up its JGB purchases.)”

“We expect the BOJ's 2% inflation target to be changed to a target for the longer term in April 2016. This would emphasize the open-ended nature of QQE and the results achieved to date.”

“We expect the BOJ to make the decision after the Upper House elections scheduled for summer 2016 to start reducing its JGB purchases (ie, tapering) in October 2016.”

“We expect JGB tapering to start in October 2016, with further regular reductions to be decided on at subsequent BOJ policy board meetings.”

“We also expect the tapering of its equity ETF purchases to start sometime after the beginning of JGB tapering (we previously expected tapering to start in April 2018).”

“We expect JGB tapering to end in March 2018.”