BoJ on hold this time, but… – BofA

By FXStreet FXStreet (Bali) – The Global Rates & Currencies Research MLI (UK) at Bank of America Merrill Lynch expect the BoJ to stay on hold while keeping a close eye on the market and foreign macroeconomic policies.

Key Quotes

“The next BoJ monetary policy meeting is scheduled for 28-29 January. Since the last meeting, the risk scenarios the BoJ previously warned about have started to materialize.”

“Though at the upcoming meeting we expect the BoJ to stay on hold while keeping a close eye on the market and moves by governments such as China, we maintain our view that the BoJ is likely to ease further during 1H16, most likely in March or April.”

“With some expectations for easing at this week’s meeting, there is a risk share prices and $/¥ will decline if monetary policy is kept on hold. Yields should remain low although concern is mounting that the decline in market liquidity might lead to sudden rise in volatility. External conditions and diminishing return of QQE suggest any bounce in $/¥ on the back of surprise easing is unlikely to be sustained beyond the short term”
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Source:: FX Street