BOJ DELIVERS. As expected the BOJ kept previous promises this morning by setting a time horizon of two years for achieving the inflation target of 2%, and pledged to continue adding stimulus to achieve this target. Streamlining its asset program, the board temporarily suspended a cap on some bond holdings and dropped a limit on debt maturities. BOJ will increase monthly bond purchases to JPY 7trn, by buying bonds up to 40y maturity. During Q1 the central bank’s monthly purchases averaged at JPY 3.4trn thereby the coming months will more than double previous. The decisions were approved by an 8-1 vote, and as this is Kuroda’s first meeting, a key point to notice is his ability to sway other members in a short period of time which gives us good expectations for future easing.
WE EXPECT NO CHANGES FROM ECB this afternoon, however, we expect Draghi to stress that 1) ECB’s monetary policy stance is accommodative,2) that it is too early for ECB to add stimulus. At the previous meeting the board discussed a rate cut and given economic development since then this is likely the case also this time, 3) that no additional measures will be discussed and 4) that the governments remain responsible for consolidating budgets, capitalising troubled banks and implementing structural reforms (Cyprus).
BOE TO MAKE AN UNEXPECTED TURN? Although we expect BOE to keep its current policy rate (0.5%) and asset purchasing program (375bn), minutes from the previous meeting shows that three out of nine members voted for further expansion of the asset purchase target to 400bn. This may be a game changer if the board decides to change course.
SEB