Halister News

(Bloomberg) -- BOJ may continue to monitor impact of negative rates on Japan’s economy until April when it releases its semi-annual economic outlook, before it potentially expands stimulus further, Bloomberg strategist David Finnerty writes.

• BOJ Gov. Kuroda said earlier this month that he’s not considering lowering negative interest rates further at this time; however, central bank’s semi-annual economic outlook could support the case for additional QQE if growth and CPI forecasts are lowered
• Recent data indicate a weak economy: Jan. overall household spending and retail sales continue to drop on y/y basis; 4Q capex growth slowed to 8.5% y/y from 11.2% in 3Q; Jan. headline inflation stayed at 0.0% y/y while CPI excluding food and energy declined to 0.7% y/y from 0.8% in Dec.
• A stronger yen also reduces imported price pressure, which could create headwinds for BOJ to achieve its 2% CPI goal and may spur a shift in its policy stance in near future
• BOJ is forecast to leave the annual rise in monetary base at JPY80t, according to 35 of 40 economists in Bloomberg survey with 4 predicting an increase to JPY90t and one projecting an increase to JPY100t; decision due tomorrow
• Policy rate is expected to remain at -0.1%, according to 38 of 40 economists in another Bloomberg survey with two predicting a decline to -0.3%
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.