BoJ: Another disappointment for JPY bulls – TDS

BoJ delivers yield curve control (YCC) tweak. Economists at TD Securities analyze Yen’s outlook after BoJ’s Monetary Policy Statement.

JPY's fate lies in the hands of the USD and yield differentials once again

The BoJ did tweak YCC by scraping the reference to the daily fixed rate buying operations, now viewing the 1% upper band not as a strict ceiling but as a reference point. Despite the tweak, the BoJ maintained the monthly purchase amount and frequency for Nov of its usual bond program. 

On CPI ex fresh food, the BoJ upgraded its forecasts with the biggest upgrade to FY24; 2023 inflation at 2.8% (prior: 2.5%), 2024 at 2.8% (prior 1.9%) and 2025 at 1.7% (prior: 1.6%). There was no change to other policy settings and it maintained its forward guidance that it will ‘add to easing without hesitation if needed’. 

At the press conference, Governor Ueda struck a dovish tone again, adding that he can't see inflation reaching target with certainty and that there's still some distance until positive cycle in prices is seen.

Today's meeting is another disappointment for JPY bulls and JPY's fate lies in the hands of the USD and yield differentials once again.