Bank of Japan to maintain the current monetary policy framework, such as size of asset purchases and tenor of target bonds, at the upcoming Monetary Policy Board meeting on 7-8 April.
The core CPI growth in February was 2.0% YoY, slowing another 0.2ppt on January, and if the impact of the consumption tax hike is netted out, the first zero inflation since May 2013.
However, at the most recent (17-18 March) press conference, BoJ governor Haruhiko Kuroda stated that even if inflation drops to zero or into negative territory due to the temporary effect of the oil price decline, as long as the output gap and other indicators are improving, it would not lead directly to additional monetary easing.
According to BofA Merrill Lynch:
"Focus at the 7-8 April MPM is likely to be on the BoJ's overseas economic risk assessment, but we expect no change in policy.
We do not expect any change in the broader pattern of steadily declining volatility and downward pressure on yields.
We retain our view that the BoJ will stay on hold for some time so that USD/JPY will be driven by USD factors"
