Halister News

(Bloomberg) -- BOJ may continue to monitor impact of negative rates on Japan’s economy until April when it releases its quarterly 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 quarterly 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 today
• 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.