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Jun 13 - 06:55 PM

JP Morgan: Here is What we Expect from the June BoJ Meeting?

By eFXdata  —  Jun 13 - 03:00 PM

Synopsis:

JP Morgan outlines its expectations for the upcoming Bank of Japan (BoJ) meeting on Friday. The analysis focuses on anticipated policy changes, particularly regarding the BoJ's balance sheet and future JGB purchase schedules.

Key Points:

  1. Policy Announcement:

    • JP Morgan expects the BoJ to announce a policy of reducing its balance sheet.
    • The focus will be on how the BoJ schedules future JGB purchases, potentially moving towards a more structured Quantitative Tightening (QT) process.
  2. Market Price Setting Function:

    • The BoJ may aim to gradually restore the market's price-setting function in the JGB market, even if the QT process is not on full autopilot.
  3. Policy Rate Expectations:

    • While a policy rate hike is not expected at this meeting, JP Morgan anticipates the BoJ will raise the policy rate to 0.25% in July.
    • The BoJ is unlikely to send a clear message on the timing of this rate hike during this week's meeting.

Conclusion:

JP Morgan forecasts the BoJ to announce a balance sheet reduction policy during this week's meeting, with a structured approach to future JGB purchases to restore market price-setting functions. A policy rate hike is anticipated in July, though no explicit timing is expected to be communicated this week.

Source:
JP Morgan Research/Market Commentary

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