BoJ yield curve control continuity should be JPY negative - ING

Analysts at ING expect that the BoJ policy decision tomorrow is unlikely to see any major surprises despite the pickup in domestic political pressures and noise around the limited success of Abenomics.

Key Quotes

“Though GDP projections may be revised a touch higher, another downward revision in the CPI profile will reinforce the difficulties faced by policy-makers in achieving the 2% inflation target. Particular attention should be paid to commentary surrounding the BoJ's Yield Curve Control (YCC) policy; the central bank was forced to offer unlimited JGB purchases earlier this month (July 7) in order to preserve the implicit +/-0.1% band around the 0% 10-year yield target. Such operations will become the norm if yield curves around the world begin to steepen and we expect BoJ officials to express the same desire to keep the JGB curve under control. On paper, BoJ policy continuity should be JPY negative.”