BoJ: QE with yield curve control unchanged – Danske Bank

Vladimir Miklashevsky, senior economist at Danske Bank, notes that the Bank of Japan kept its QE with yield curve control unchanged as expected at a meeting ending this morning with a 7-2 vote.

Key Quotes

“There was speculation as to whether forward guidance would be extended further into 2020, but this was left unchanged too. Bank of Japan kept its assessment of the economy stating that ‘Japan's economy is likely to continue on a moderate expanding trend’ but it notes overseas risk. The forecast for inflation in FY2019 and FY2020 is now 1.0% and 1.3% respectively (including VAT-hike effects).”

“Since the last projections in April, inflation has headed south again, especially due to the lower oil price. Thus, Bank of Japan remains in wait-and-see mode. As long as weak foreign demand is not spilling over to the domestic economy and USD/JPY keeps a safe distance to 100, Bank of Japan is likely to stay there.”