Bank of America (BofA) shares their forecast and analysis for the upcoming Bank of Japan (BoJ) policy meeting, discussing its potential impact on the Japanese Yen (JPY).
BoJ Policy Meeting Predictions:
- BofA anticipates the BoJ will maintain its current policy settings, including negative rates and yield curve control (YCC), at the upcoming meeting on January 23. This prediction aligns with the consensus view among analysts.
No Major Shifts in BoJ Strategy:
- Given the BoJ's cautious stance, significant policy changes that could bolster the JPY are not expected this year.
JPY Driven by Global Factors:
- The JPY's near-term trajectory is likely to be influenced more by global dynamics and seasonal trends rather than domestic policy decisions.
Bearish JPY Forecast:
- BofA maintains a bearish outlook on the JPY, contrary to the general consensus. They predict USD/JPY to be at 142 by the year-end, compared to the consensus forecast of 135. Their near-term forecast is set at 145 for the end of March.
Downside Risks for JPY:
- BofA anticipates that risks for the JPY will lean towards the downside, particularly in the second half of 2024 and into 2025.
BofA's analysis suggests a status quo outcome from the upcoming BoJ policy meeting, with no major shifts expected in the near term. The bearish outlook for the JPY is grounded in the influence of global factors over domestic policy decisions, indicating potential downward pressure on the currency in the longer term.