Muted reaction to BOJ remarks continues - Nomura

Research Analysts at Nomura that lately the Japanese currency shows little reaction to the comments from BOJ board members, especially ones’ from BOJ Governor Kuroda.

Key Quotes:

“BOJ Governor Kuroda’s comments in parliament continue to suggest a low probability of immediate easing. He said he does not see an immediate need to alter long and short-term rates. Although inflation momentum in Japan remains subdued, the BOJ is very likely to keep its policy rates unchanged next week”

“Deputy Governor Iwata said the quantity (of asset purchases) will change along with 10yr yields, suggesting a more flexible stance on QE from his previous stance”

“Deputy Governor Iwata has been viewed as one of the strongest believers of the efficacy of the QE programme, and he said he still believes that large-scale bond buying is necessary”

“JGB yields steepened slightly, while Governor Kuroda commented there was no need to lower super long-term yields. The JGB market remains less volatile, which should encourage foreign bond investment by Japanese investors, without FX hedging”

“The steepening of the JGB curve may not necessarily lead to an appreciation of JPY, unless risk sentiment is adversely affected”