Barclays Research discusses its expectations for this week's BoJ policy meeting.
"We expect the BoJ to stand pat at this week’s meeting, but see potential for changes in economic forecasts and guidance. Any small tweaks, including changes to the forward guidance that is currently tied to COVID with an easing bias1, forecasting 2% CPI in new FY25 as part of its renewed projections given the upside surprise in March core CPI last week, and/or changes in operations could support the yen as market expectations around radical policy changes seem to have been tempered," Barclays notes.
"Near-term challenges to yen upside notwithstanding, we look for a more-lasting rebound on a medium-term horizon on the basis of BoJ policy normalization (starting with YCC changes in June) and sustained improvements in current account. We target 123 in USDJPY on a 12-month horizon," Barclays adds.