BoJ Preview: Forecasts from six major banks, no change at the final meeting under Kuroda

The Bank of Japan (BoJ) will announce its monetary policy decision on Friday, March 10 at 03:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of six major banks. 

This will be the last one under current Governor Kuroda, as Kazuo Ueda has been appointed to succeed Kuroda from April on. No changes are expected in this March meeting. A policy shift by Kuroda in his last meeting would be a shocker.

Danske Bank

“The current BoJ Governor, Kuroda, has his last monetary policy meeting. We still think BoJ will tweak its yield curve control in the short-term. It is not likely to happen this week, but we also were surprised last time they did it in December. Either way, we think it is a matter of time and could happen during Q2.”

TDS

“It is unlikely that the BoJ will rock the boat at this meeting even as CPI inflation hit a 41-year high. Governor Kuroda at his last meeting will likely keep policy unchanged, with further changes having to wait for incoming governor Ueda starting in April. We think the BoJ could shift the top end of the YCC band again in the months ahead, potentially as early as April.”

SocGen

“We expect the BoJ to maintain its main monetary policy, i.e. YCC and ETF purchases.  The BoJ is likely to want to see the results of this year’s spring wage negotiations, or the shunto in Japanese. Going forward, the BoJ is also likely to keep its policies unchanged in April, at the first meeting under the governor nominee, Kazuo Ueda.  However, we expect that the BoJ will widen the range of fluctuation permitted on 10-year JGB yields from ±50 bps to ±100 bps at the June monetary policy meeting. In addition, the BoJ could make it clear that it will hold the current range or YCC until further progress is made in prices and wages. We continue to expect that the YCC will not be abolished in June.”

Deutsche Bank

“We expect the BoJ to adhere to its present monetary policy, with YCC removal seen unlikely, although you can't rule it out given December's surprise. This will also be the last monetary policy meeting for Governor Kuroda.”

Citibank

“BoJ will hold a policy meeting on March 9-10, the last one for Governor Kuroda. We expect to see the policy status quo maintained.”

BofA

“We expect no change in the BoJ's key policy targets, including the +/-50 bps band around the zero% 10yr JGB long rate target. We summarize expected market reactions to tail risks: No change: the market to await Ueda (USD/JPY 137). Shortening target from 10yr to 5yr: It could eventually be bearish for JPY if Ueda confirms dovish stance on the front-end as a 5yr ceiling can work as forward guidance (USD/JPY 134-136). Raising 10yr target band ceiling to 1% from 0.5%: Policy uncertainty to remain high (USD/JPY 132-134). YCC removal: Market may price in earlier and faster rate hikes on the front-end (USD/JPY 128-130).”