BOJ April 2018 Monetary Policy decision and Economic Outlook on 27.04.2018

  • Leaves Interest Rate on Excess Reserves (IOER) unchanged at -0.10%
  • Maintain its policy framework of “QQE with Yield Control” around 0.00%
  • Maintains asset purchases at an annual pace of JPY 80T
  • Maintains the increase of ETF holdings at an annual pace of JPY 6T
  • Kataoka continues to dissent
  • The statement on Monetary policy

BOJ Economic Outlook Report

  • Deletes Timeframe mention for the Price Target achievement
  • Impact of tax hike is among risks to the economic outlook
  • Inflation likely to accelerate towards 2% as output gap improves
  • Risks to price outlook skewed to the downside for fiscal 2019
  • Consumer Inflation expectations moving sideways around 1%
  • Momentum for achieving price target sustained but lacking steam ( that’s an understatement looking at Tokyo’s CPI today)
  • GDP forecasts:
  • Raises FY18/19 GDP growth from 1.4% to 1.6%
  • Raises FY19/20 GDP growth from 0.7% to 0.8%
  • Sets FY20/21 GDP at 0.8%
  • Inflation Outlook:
  • Maintains FY18/19 core CPI outlook at 1.4%
  • Maintains FY19/20 core CPI (ex impact of consumption tax) at 1.8%
  • Sets FY20/21 core CPI at 1.8
  • The full text of the Outlook report

Total status quo then, buying time to reach the goal. JPY doesn’t budge at all 109.20 around for the moment. I can’t see a big impact either, just confirming nothing is changing and risks still skewed to the downside should be keep the JPY in check.

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