Bloomberg
Published Jun 14, 2020 04:00PM ET
Updated Jun 14, 2020 05:09PM ET
BOJ to Sit Tight While Assessing Virus Response: Decision Guide
(Bloomberg) -- The Bank of Japan is expected to leave its main policy levers untouched Tuesday as it assesses a raft of measures already taken to support the pandemic-hit economy.
The BOJ is likely to leave interest rates and asset purchases unchanged at the end of its two-day meeting. Officials will consider the impact of measures taken so far to soften the virus blow and don’t see a pressing need now for any further major moves, people familiar with the matter said.
Many economists surveyed by Bloomberg expect the estimated size of a BOJ loan program linked to government lending to rise after Prime Minister Shinzo Abe’s administration announced an expansion of the lending measures last month.
Market fluctuations last week are far from the volatility observed in March and continued stability in the yen has given the BOJ breathing room to sit tight for the time being. The economy is also likely past its weakest point, following the lifting of Japan’s state of emergency in late May and the gradual easing of lockdowns in key export markets.
“No big move doesn’t mean that the BOJ is free from any concerns,” said Tomo Kinoshita, global market strategist at Invesco (NYSE:IVZ) Asset Management in Tokyo. “The BOJ will be checking what else needs to be done and communicating its willingness to do more.”
Since March, the bank has pledged unlimited purchases of government bonds, expanded its exchange-traded fund buying and launched loan programs as part of measures estimated to be worth about $700 billion.
The Federal Reserve last week painted a gloomy picture of the U.S. outlook and hinted that interest rates may effectively stay at zero through 2022. Governor Haruhiko Kuroda will probably sound a dovish tone at his post-decision press conference to avoid the possibility of the yen strengthening.
The BOJ policy statement is usually out in early afternoon with Kuroda’s press conference following at 3:30 p.m. in Tokyo.
What Bloomberg’s Economist Says
“A yen in a relatively comfortable range against the dollar also takes pressure off the BOJ to consider loosening policy. The yield differential with the U.S. is likely to limit any dollar weakness.”
Asia Economist Team
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Policy Recap
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Written By: Bloomberg
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