BoJ: New team likely to maintain existing monetary policy - Nomura

The BOJ governor has commented that setting out the details of the BOJ's exit strategy at too early a stage would likely be difficult, referring to the fact that the Fed has been normalizing its monetary policy in a way that differs from the exit strategy it had previously set out publicly, notes Yoshiyuki Suimon, Research Analyst at Nomura.

Key Quotes

“This appears to indicate that the BOJ intends to manage its monetary policy in a flexible manner, keeping a close watch on the market's reaction, when it comes to actually implementing its exit strategy.”

“In addition, in response to the question of whether it is more important to broaden the scope for monetary policy (≒ raising the target interest rate level) to enable the BOJ to respond to uncertainties in the macroeconomic outlook, or to achieve the price stability target, the BOJ governor clearly replied that it was the latter. Some people expect the BOJ to raise interest rates in order to give itself more room to maneuver, but the BOJ governor has indicated that the BOJ will not raise rates for this purpose as long as inflation is still some way off the target.”