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18 May 2015
BOJ Kuroda remains optimistic on inflation outlook - Nomura
FXStreet (Bali) - BOJ Kuroda remains optimistic on the inflation outlook, notes Nomura's FX Strategist Yujiro Goto, adding that the BOJ is expected to leave policy unchanged next Friday.
Key Quotes
"The BOJ governor Kuroda repeated last week that he does not think further easing is needed now."
"He still said he would not hesitate to adjust policy, if needed, but he maintains his optimistic view on the inflation outlook."
"He reiterated that CPI inflation is projected to accelerate toward the 2% target and the underlying inflation trend has improved steadily. Governor Kuroda said inflation is expected to reach 2% around H1 FY2016."
"The BOJ changed its expected timing to achieve a 2% inflation rate to H1 FY2016 at its previous meeting, and this comment was not a surprise. Even though actual core inflation remains weak."
"We expect the BOJ to leave policy unchanged next week (21-22 May)."
"Governor Kuroda also said that he will watch if slowing CPI affects inflation expectations. Inflation expectations based on a survey released and conducted by the Cabinet Office showed a small improvement in household inflation expectations, as more households expect inflation to rise (87.6%, increasing from 86.3% the previous month)."
"Governor Kuroda stated today that companies’ and households’ inflation views have started to change, and his positive view on inflation expectations may not change anytime soon."
"At the same time, BOJ Governor Kuroda has been emphasizing the importance of the output gap as one of key factors to influence underlying inflation trend."
"One of the two key reasons behind the BOJ’s optimistic judgment on inflation momentum can be challenged after the release of Q1 GDP, which may increase market expectations for BOJ easing again into the July meeting."
"As the BOJ did not show any strong intention to ease in the near future, even after the BOJ admitted at the previous meeting that the timing to achieve 2% target would be delayed, market expectations for BOJ easing in the near future likely declined. JPY short positions are also likely to be small now, as suggested from IMM data."
"We still judge JPY is an attractive currency to short, when considering USD long exposures, keeping our USD/JPY long recommendations, especially into the release of Q1 GDP next Wednesday."
Key Quotes
"The BOJ governor Kuroda repeated last week that he does not think further easing is needed now."
"He still said he would not hesitate to adjust policy, if needed, but he maintains his optimistic view on the inflation outlook."
"He reiterated that CPI inflation is projected to accelerate toward the 2% target and the underlying inflation trend has improved steadily. Governor Kuroda said inflation is expected to reach 2% around H1 FY2016."
"The BOJ changed its expected timing to achieve a 2% inflation rate to H1 FY2016 at its previous meeting, and this comment was not a surprise. Even though actual core inflation remains weak."
"We expect the BOJ to leave policy unchanged next week (21-22 May)."
"Governor Kuroda also said that he will watch if slowing CPI affects inflation expectations. Inflation expectations based on a survey released and conducted by the Cabinet Office showed a small improvement in household inflation expectations, as more households expect inflation to rise (87.6%, increasing from 86.3% the previous month)."
"Governor Kuroda stated today that companies’ and households’ inflation views have started to change, and his positive view on inflation expectations may not change anytime soon."
"At the same time, BOJ Governor Kuroda has been emphasizing the importance of the output gap as one of key factors to influence underlying inflation trend."
"One of the two key reasons behind the BOJ’s optimistic judgment on inflation momentum can be challenged after the release of Q1 GDP, which may increase market expectations for BOJ easing again into the July meeting."
"As the BOJ did not show any strong intention to ease in the near future, even after the BOJ admitted at the previous meeting that the timing to achieve 2% target would be delayed, market expectations for BOJ easing in the near future likely declined. JPY short positions are also likely to be small now, as suggested from IMM data."
"We still judge JPY is an attractive currency to short, when considering USD long exposures, keeping our USD/JPY long recommendations, especially into the release of Q1 GDP next Wednesday."