Today’s BoJ meeting likely to disappoint - Rabobank

Michael Every, Head of Financial Markets Reseach, Asia-Pacific, at Rabobank, note that today’s BoJ meeting seems likely to disappoint.

Key Quotes

First and foremost, because the government is not significantly widening the fiscal deficit. If we had seen a one- or two-year stimulus package of JPY28 trillion then we might have crossed that Rubicon; but we didn’t, and so we haven’t.

Secondly, Mr. Kuroda has made clear he sees helicopter money as illegitimate and even illegal – though of course the BoJ doesn’t need to say it is adopting helicopter money: all it has to do is keep buying JGBs on a large scale as fiscal and monetary policy align.

Thirdly, the BoJ have shown the y like to surprise the market: a move today would be giving them what they expect. Lastly, there is perhaps the lingering memory that the last BoJ governor who adopted helicopter money back in the 1930s was assassinated a few years later for trying to turn the monetary spigot off again. (Today’s equivalent probably being to lose the rights to USD250,000 a pop after-dinner speaking gigs.)

All in all, we expect the BoJ to fiddle with the margins of its already extraordinarily loose monetary policy, with perhaps a slight increase in QE (perhaps increasing purchases of ETFs, for example), and/or technical measures to try to boost the pass through from already negative interest rates.