What to Expect From the BOJ’s Monetary Policy Meeting Next Week
Amid fading concerns about external risks such as the US-China trade war and the possibility of a no-deal Brexit, the BOJ is widely expected to hold its monetary policy unchanged at its upcoming meeting next week. The Bank of Japan is already under significant strain on the bank of its ultra-loose monetary policy amid weak inflation and a slowdown in Japan’s GDP.
However, policymakers in the central bank remain optimistic that the government’s recently announced fiscal stimulus package could boost economic growth and infuse some much needed optimism into Japanese markets. Japan’s export-oriented economy has struggled lately as a result of the prolonged trade war between the US and China, as China is one of its most important trade partners.
With the risk of external risks receding, the BOJ’s focus will shift to domestic risks, especially the weakness in domestic demand driven by the recent sales tax hike. Amid the trade tensions and global economic slowdown, Japan’s economy had previously remained supported by robust domestic demand, which has started to reduce after the government hiked sale tax from 8% to 10%.
The BOJ is expected to maintain its interest rate at around -0.1% while the the 10-year government bond yields are likely to stay around 0%. The Japanese central bank’s policy meeting is scheduled to end on December 19.
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