Bank of Japan Preview: Forecasts from five major banks

The Bank of Japan (BoJ) will announce its Interest Rate Decision and release the Monetary Policy Statement on Friday, June 18 at 03:30 GMT. As we get closer to the release time, here are the expectations forecast by the economists and researchers of five major banks. 

Ahead of the event, USD/JPY has reversed its direction in the second half of the day and was last seen losing 0.45% on a daily basis at 110.20.

See: USD/JPY to test long-term resistance starting at 111.94 above the 110.97 year high – Credit Suisse

CE

“At its June meeting, we think the Bank of Japan may extend the deadline on its emergency lending facility from September to December. Beyond that point, it should further taper its purchases of short-dated debt as it digs in for a prolonged hold.”

Standard Chartered

“We expect the BoJ to keep the policy balance rate unchanged at -0.1% and the 10Y yield target at c.0%. Macro data has shown signs of improvement since the last meeting in April. Q1 GDP growth was revised up, and industrial production and retail sales improved as well. However, economic challenges remain. While Q1 GDP contracted less than the initial forecast, it fell a significant 3.9% on an annualised basis. We expect the BoJ to maintain its accommodative stance until it sees further economic improvement.” 

Danske Bank

“We expect BoJ to hold policy rates and its QQE programme unchanged on Friday, but in light of the service sector still struggling with a state of emergency in big parts of the country, the BoJ will likely extend its special programme aimed at channelling money to cash-strapped firms.”

TDS

“Main focus for the BoJ meeting is whether they extend COVID-19 aid for businesses past the current expiration date of September, with a high probability of such an announcement at this meeting.”

UOB

“We still keep our view for the BoJ to do more and enhance its monetary policy easing further, most likely through re-accelerating its GB to Japanese corporates and SMEs. Market expectations are now tilted to the BoJ having reached the end of the line on normalization and will remain in a holding pattern on policy until at least April 2023 when Governor Kuroda is scheduled to leave the BoJ.”