7 Jul 2014
No additional easing expected from the BoJ this week - RBS
FXStreet (Łódź) - The RBS team of analysts believe that the results of the June BoJ Tankan Survey, released last week, point to no action from the BoJ at its monetary policy meeting on Thursday.
Key quotes
"While large manufacturer sentiment D.I., the headline value, fell by more than our expectation to +12 points in the June BoJ Tankan Survey (+17 points in the previous survey), the value for the outlook improved in line with our estimate and the content was reasonable, in our view."
"The BoJ expressed considerable confidence in achieving the price target by the middle
of the outlook period through FY16."
"The latest Tankan Survey confirms that the overall economy continues to run at a robust pace considering the absence of a sharp drop in employment and production and operational equipment D.I. values, despite encountering a demand setback from the consumption tax hike."
"We expect the BoJ to sustain its assessment that 'the economy’s macro supply-demand balance continues to tighten' in light of the Tankan Survey results because it directly estimates and assesses a supply-demand balance for the utilisation of employment and economic capital."
"We hence think that the BoJ will retain its bullish price outlook even without relying on a
more complicated trend of an 'upward shift' by or 'steepening' of the Phillips curve
presenting the average relationship between the macro supply-demand balance and
inflation rate."
Key quotes
"While large manufacturer sentiment D.I., the headline value, fell by more than our expectation to +12 points in the June BoJ Tankan Survey (+17 points in the previous survey), the value for the outlook improved in line with our estimate and the content was reasonable, in our view."
"The BoJ expressed considerable confidence in achieving the price target by the middle
of the outlook period through FY16."
"The latest Tankan Survey confirms that the overall economy continues to run at a robust pace considering the absence of a sharp drop in employment and production and operational equipment D.I. values, despite encountering a demand setback from the consumption tax hike."
"We expect the BoJ to sustain its assessment that 'the economy’s macro supply-demand balance continues to tighten' in light of the Tankan Survey results because it directly estimates and assesses a supply-demand balance for the utilisation of employment and economic capital."
"We hence think that the BoJ will retain its bullish price outlook even without relying on a
more complicated trend of an 'upward shift' by or 'steepening' of the Phillips curve
presenting the average relationship between the macro supply-demand balance and
inflation rate."