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Jun 16 - 09:55 AM

JPY: BoJ Under Pressure, But Don't Expect Capitulation Yet - BofA

By eFXdata  —  Jun 16 - 09:04 AM

Bank of America Global Research discusses its expectations for tomorrow's BoJ policy meeting.

"We expect the Bank of Japan to keep all key targets, as well as its rates forward guidance, unchanged at its upcoming policy board meeting on Friday, 17 June. The board is also likely to leave, intact, the +25bp ceiling for the 10-year yield under yield curve control (YCC). In fact, the BoJ will likely re-iterate its pledge to conduct unlimited fixed-rate bond-buying operations every business day to defend YCC, perhaps as a footnote in the policy statement," BofA notes.

"If we are wrong, and the BoJ is forced to modify YCC due to concerns over the sustainability of the framework, it will likely not be immediate. Instead, the most likely "tail risk" for this meeting is that Governor Kuroda orders a policy review, with a promise to deliver the conclusions by the next MPM, on 21 July. But we think the probability of this scenario is still low," BofA adds. 

BofA Global Research


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