BoJ Getting Restless?
For at least the past two years the BoJ’s Policy Board has raised its bond purchase targets in an incremental fashion, gradually increasing the amount of easing applied. However, an investigative report published overnight by Reuters claimed that “some” members of Monetary Affairs Dept within the BoJ are losing confidence in this approach and now favour something more radical. We stress however that this department does not make policy decisions itself, but rather develops policy options for the Policy Board to consider. Nevertheless, “some” department members it is claimed now advocate a “big bang” approach of suddenly increasing the BoJ’s easing targets by up to JPY 100 trn in a single step. That would be nine times larger than any previous incremental increase to the Asset Purchase Program. USDJPY climbed about 50 pips shortly after the article was circulated, although month-end buying may also have been a contributing factor.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank