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25 Mar 2013
Forex Flash: Open-ended JGB purchases are a hallmark of BoJ – RBS
FXstreet.com (Barcelona) - The main focus is on how the Bank plans to purchase JGBs. According to Junko Nishioka, Chief Economist at RBS, “We think the BoJ is already prepared for this discussion because, at the previous policy meeting, board member Sayuri Shirai proposed accelerated implementation of open-ended JGB purchases from 2014 onwards and integration of the APP fund and rinban operations.”
Moreover, we believe the first proposal has a strong likelihood of adoption at the April meeting (3- 4 April) considering its favorable assessment by Governor Kuroda. We also see lengthening the duration of JGB purchases as a leading policy choice in light of Mr. Kuroda’s comment at the inaugural press conference about lowering the overall yield curve.
“In our view, the conference has confirmed the strong resolve of the Bank’s new leadership to overcome deflation and achieve the 2% inflation rate via these accelerated asset purchases. Despite the widespread enthusiasm, we have concerns about the feasibility of these goals, because of a discrepancy between quantitative and qualitative easing measures and actual inflation rate gains.” Nishioka adds.
Moreover, we believe the first proposal has a strong likelihood of adoption at the April meeting (3- 4 April) considering its favorable assessment by Governor Kuroda. We also see lengthening the duration of JGB purchases as a leading policy choice in light of Mr. Kuroda’s comment at the inaugural press conference about lowering the overall yield curve.
“In our view, the conference has confirmed the strong resolve of the Bank’s new leadership to overcome deflation and achieve the 2% inflation rate via these accelerated asset purchases. Despite the widespread enthusiasm, we have concerns about the feasibility of these goals, because of a discrepancy between quantitative and qualitative easing measures and actual inflation rate gains.” Nishioka adds.