BoJ: Yield curve control unchanged – Danske Bank

Daniel Brødsgaard, analyst at Danske Bank, notes that the BoJ has kept its QQE with yield curve control unchanged at a meeting ending this morning.

Key Quotes

“It tweaked the forward guidance somewhat though, now saying they "will keep very low-interest rates levels for an extended period of time at least through to around spring 2020”. Until now there was now specific time frame for how long rates would be kept at low levels.”

“The BoJ cut its GDP forecast for FY2018 ending in March from 0.9% to 0.6%, which is no surprise considering what looks like a weak Q1. In addition, FY2019 and 2020 GDP and inflation forecasts have been cut slightly. Particularly interesting is the new inflation outlook, which now includes FY2021.”

“BoJ expects CPI inflation to hit 1.6% by then (lowest t+2 inflation forecast since 2013). That is, the BoJ does not expect to meet its inflation mandate within a two to three-year horizon.”