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19 May 2015
BoJ meeting will be neutral for USD/JPY - BTMU
FXStreet (Guatemala) - Analysts at Bank of america Merrill Lynch explained that over the near term, they do not expect the BoJ's Monetary Policy Meetings to have a major impact on the USD/JPY.
Key Quotes:
"Given the current state of the economy and inflation, our economists expect monetary policy to stay on hold."
"Last October's decision to expand QQE was very close to being rejected with a five-to-four vote. In addition, the level of skepticism in the market over the sustainability of QQE– though still low–is gradually inching up, along with the debate over its side effects."
"Accordingly, if Kuroda is to propose additional easing, he is likely to spend time in carefully forming consensus, and dovish shifts could be seen in the meeting minutes and speeches by policy board members (which we have not seen). Overall, (1) the strength/weakness of economic data and (2) how they impact the BoJ's tone should be key for the FX market. We have not seen any major data that would alter the BoJ’s thinking."
"There was a media report last week that suggested the option of cutting the interest on excess reserve is not permanently off the table according to “people familiar with the discussions”."
"While we also think the option can arise in a crisis situation, we view the probability is low at the moment for reasons we discussed in our recent report. Taken all together, we view the upcoming policy meeting as neutral for the USD/JPY."
Key Quotes:
"Given the current state of the economy and inflation, our economists expect monetary policy to stay on hold."
"Last October's decision to expand QQE was very close to being rejected with a five-to-four vote. In addition, the level of skepticism in the market over the sustainability of QQE– though still low–is gradually inching up, along with the debate over its side effects."
"Accordingly, if Kuroda is to propose additional easing, he is likely to spend time in carefully forming consensus, and dovish shifts could be seen in the meeting minutes and speeches by policy board members (which we have not seen). Overall, (1) the strength/weakness of economic data and (2) how they impact the BoJ's tone should be key for the FX market. We have not seen any major data that would alter the BoJ’s thinking."
"There was a media report last week that suggested the option of cutting the interest on excess reserve is not permanently off the table according to “people familiar with the discussions”."
"While we also think the option can arise in a crisis situation, we view the probability is low at the moment for reasons we discussed in our recent report. Taken all together, we view the upcoming policy meeting as neutral for the USD/JPY."