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BOJ to leave its policy unchanged this week - Nomura
FXStreet (Bali) - Yujiro Goto, FX Strategist at Nomura, expects the BOJ to leave its policy unchanged at its meeting this week (30 April).
Key Quotes
We expect the BOJ to leave its policy unchanged at its meeting this week (30 April). Core inflation hit 0% in February, and the BOJ downgraded its inflation assessment at its previous meeting.
The BOJ is very likely to downgrade its FY2015 inflation forecast to reflect weaker inflation momentum, as we think the current 1.0% inflation forecast is too optimistic.
Nonetheless, today Governor Kuroda repeated that the output gap and inflation expectations are key drivers of actual inflation and both are expected to continue improving.
His comments suggest the BOJ is still confident about its optimistic mid-term inflation forecasts, and our economists expect the Bank to keep its FY2016 inflation forecast at +2.2%. An above 2.0% FY2016 inflation forecast suggests the Bank expects a clear acceleration in inflation later in FY2015, seeing limited need for easing again anytime soon