15 Mar 2016
BOJ preview: March pause, April easing - RBS
RBS base case is for the BOJ to keep its asset purchases and new negative policy rate unchanged (70% probability) today.
Key Quotes
"The BoJ could cut its deposit rate further but will only have had limited time to assess its new policy (10% probability)."
"The BoJ could also expand the amount of bank reserves facing its new 10bps charge from just ¥10trn (10% probability)."
"Last, the BoJ could raise its ¥80trn a year of bond buying to show it hasn’t hit limits on its asset purchases (10% probability)."
"We expect the BoJ to pause this month and instead ease on April 28 when it meets after the Federal Reserve next month."
"Thus we would buy any post-meeting dollar-yen dip this month and target a move from 110-115 back to 115-120 in Q2’16."
Key Quotes
"The BoJ could cut its deposit rate further but will only have had limited time to assess its new policy (10% probability)."
"The BoJ could also expand the amount of bank reserves facing its new 10bps charge from just ¥10trn (10% probability)."
"Last, the BoJ could raise its ¥80trn a year of bond buying to show it hasn’t hit limits on its asset purchases (10% probability)."
"We expect the BoJ to pause this month and instead ease on April 28 when it meets after the Federal Reserve next month."
"Thus we would buy any post-meeting dollar-yen dip this month and target a move from 110-115 back to 115-120 in Q2’16."