Quotes from Commerzbank Corporates & Markets:
-The minutes of the Bank of Japan's (BoJ) meeting (on 21st January) was not the dominating news from Japan this morning. After all it is well known that the BoJ remains optimistic as regards the inflation outlook. Much more interest was created by an interview with Etsuro Honda, an economic advisor of the Japanese Prime Minister Shinzo Abe. Honda expects that the extension of the BoJ's QE measures (of 31st October) will only start showing an effect with a six to eight month delay.
-That means that until the summer the BoJ can sit back, relax and wait whether the additional stimulation will fuel inflation after all. If the BoJ and government share Honda's view there is no reason to even consider further expansionary monetary policy measures until then. And as a result it is also clear that Honda is in favour of considering USD-JPY levels in the area of 117 to 120 as the comfort level of the Japanese government and central bank.
-We are more sceptical as regards the inflation outlook, but our view is of little relevance. The fact that the BoJ is once again accepting a long wait for the effects of its own measures fits in with its usual behaviour. So there is much to suggest that USD-JPY really will remain in its so-called comfort zone of 117/120.
