The Bank of Japan is likely to ease policy further in April, but investors haveonly just begun to position for this outcome. So we raise our USDJPYforecasts to 103 (1m) and 105 (3m) – up from 101 and 103 previously. Governor Kuroda has boosted core inflation to +0.7% y/y by doubling themonthly pace of JGB purchases (Chart 1). Progress so far looks consistent withhitting the 2% target on schedule in two years. But UBS Japan economist,Daiju Aoki, expects inflation will struggle to accelerate from here. By April2014, the trajectory may have begun to veer noticeably off track
Read the full report: UBS