Bank of Japan: Not major changes to the current stance for the foreseeable future - Wells Fargo

On Tuesday, the Bank of Japan will have its policy meeting. Analysts at Wells Fargo expect the central bank to keep rates unchanged and they assume no major changes in the short-term. 

Key Quotes: 

“Unlike several other major central banks, the Bank of Japan (BoJ) has not signaled much in the way of imminent easing. To some extent, this reflects the more limited policy options available to it. Although inflation remains well shy of the central bank’s 2% target, there have been a few encouraging developments in the Japanese economy. For example, the employment-population ratio in Japan has skyrocketed since the start of 2013.”

“Our forecast assumes the BoJ will not make any major changes to the current stance of policy for the foreseeable future. One risk to this outlook is a scheduled hike in the consumption tax this October, which could cause some economic disruptions. Should policy need to be eased further, the BoJ could push its policy rate deeper into negative territory, apply negative rates to a broad set of bank reserve balances or move its 10-year JGB yield target down from its current target of 0%.”