Forex Flash: BoJ APP guidance unchanged for 2013 – UBS (Barcelona) - There was no change to APP guidance for 2013 – as communicated previously the Bank aims to increase its stock of T-bills and JGBs over the course of 2013 by JPY 15 trillion and JPY 20 trillion respectively. According to Berry and Yu, “This much we knew already, however the overnight announcement provides the first guidance into 2014 and beyond.”

Disappointingly, the BoJ announced its intention to buy only JPY 10 trillion worth of assets (T-bills and JGBs) throughout the whole of 2014 (net of redemptions). That's over three times slower than the current pace of asset accumulation - totally inadequate in our view given the enormity of the challenge of generating 2% inflation.

“Granted, the BoJ shifted to an "open-ended" framework for giving future APP guidance, however we do not see this as a significant development – it signals the Bank's willingness to keep easing for as long as it needs to, but the policy language already made that abundantly clear.” note Research Analysts Gareth Berry and Geoffrey Yu at UBS.