BoJ to downgrade inflation forecasts and remain dovish - ANZ

Analysts at ANZ offer a brief preview of what to expect from Wednesday’s Bank of Japan (BoJ) monetary policy announcement due around 3 GMT.

Key Quotes:

“Meeting will not result in any change in policy.

The board will downgrade inflation forecasts and remain dovish.

Looking ahead, we think that the stalled selloff in global rates could create complications; narrower differentials and slower asset purchasing may prompt the board to look for new easing options. 

Recent economic and financial market developments have not favored the BoJ's 2% inflation goal. The growth pulse has been disappointing, with Q1 and Q3 2018 GDP falling. So the BoJ's output gap measure has become less positive, while the Cabinet Office's measure has returned to being in deficit.

As a consequence, underlying price pressures are likely to moderate, and the recent strengthening of the JPY and decline in oil prices will have a disinflationary impact on the CPI.”