BoJ likely to maintain 'QQE with yield curve control' policy unchanged at Friday’s policy meeting, says Danske Bank

The Bank of Japan (BoJ) is expected to maintain its 'QQE with yield curve control' policy unchanged at the next two-day monetary policy meeting ending on April 27, according to the latest report from Danske Bank. Also, there are no expectations for newly-appointed super-dovish Deputy Governor Wakatabe to team up with Kataoka in the dissenting camp but instead pull board consensus slightly more dovish.

As growth in Japan is most important, export markets are becoming slightly more subdued and exporters now have to deal with a stronger JPY, we expect the economic upswing to lose some momentum. Q1 figures so far look fairly weak, and that is likely to be reflected in the BoJ's quarterly macroeconomic outlook released alongside the statement on monetary policy. 

Since the beginning of the year, there have been some changes in the communications strategy from the central bank. On April 3 Kuroda said in the Parliament that internal discussions are at least taking place in the BoJ on the subject.

Since the last meeting in March, the two deputies Iwata and Nakaso have been replaced by career central banker Masayoshi Amamiya and Professor Masazumi Wakatabe. Amaniya is likely to be located somewhere in the middle of the pack when it comes to the board members' policy stance - he did after all mastermind much of the policy measures himself when he was head of both the bank's monetary affairs group and markets division

"Currently we consider the probability of further easing to be at least as high as the probability of tightening, but we do not see any changes to policies within a one-year horizon. In our view, it would require a substantial dovish shift in the Bank of Japan's rhetoric for USD/JPY to settle above 110," the report added.

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