Bank of Japan: Less urgency in the administration of monetary policy - Wells Fargo

At today’s meeting, the Bank of Japan left its monetary policy unchanged. Analysts at Wells Fargo, noted that it dropped the deadline for achieving its 2.0% target making it easier to wait for the medicine to take.

Key Quotes: 

“At its scheduled meeting this week, the Bank of Japan (BoJ) held interest rates steady and maintained its comprehensive program of monetary policy support, but it dropped any reference to a timeline for achieving its 2.0 percent inflation target. Previously it had been targeting the end of fiscal year 2019 (March 2020).”

“Financial markets seized upon the dropping of any date reference hitting the inflation target, but at the press conference that followed, BoJ Governor Kuroda affirmed multiple times that the removal of the date was not in any way an indication of monetary policy bias.”

“Without the clock ticking and a specific deadline approaching, there is less urgency in the administration of monetary policy. In that regard, the removal of the deadline offered the newly minted Deputy Governor the opportunity to go along with the majority in good conscience that doing so would not betray his dovish tendencies. That does not preclude Mr. Wakatabe (recently appointed Deputy Governor, generally viewed as a dovish) from eventually calling for additional measures, but for now at least, it provides time for the monetary policy medicine to take without the need for an immediate additional dose.”

“We see the dropping of the target date for hitting the inflation target as further affirmation that any tightening remains a long way off. Between now and the end of next year, the fastest pace of year-over-year CPI inflation we have in our forecast is just 1.5 percent.”