16 Feb 2015
Key points for upcoming Kuroda’s press conference – BAML
FXStreet (Barcelona) - With BoJ Governor Kuroda unlikely to comment on any additional policy actions, his Q&A portion post-meeting press conference will be of prime focus, as such the BofA-Merrill Lynch team lists the three key points of this upcoming Q&A.
Key Quotes
“The first is the underlying trend in prices. The YoY rise in core inflation (excluding the impact of the consumption tax hike) has declined from a peak of close to 1.4- 1.5% in Apr-May 2014 largely due to a diminished boost from food and energy prices. However, it is true that the rise in the core CPI (excluding food and energy) has not improved.”
“We think his view on whether the decline in oil prices has still not affected prices other than energy prices and inflation expectations and the type of data that form the basis for his view will be an important factor in terms of the BoJ's communication with financial market participants (ie, financial market participants' understanding of the BoJ's assessments and their expectations regarding future policy).”
“The second is his view on the conditions for CPI growth in FY3/16 to reach the forecast of 1%. His comments on when the BoJ expects inflation to bottom out and the extent of wage increases it anticipates from the spring wage negotiations coming up in March would also be noteworthy.”
“The third is his view on the JGB market, particularly his interpretation of the recent high volatility of long-term yields and whether the BoJ can continue to purchase large amounts of JGBs.”
“Through these factors, market participants would look at what options the BoJ had if additional easing becomes necessary.”
Key Quotes
“The first is the underlying trend in prices. The YoY rise in core inflation (excluding the impact of the consumption tax hike) has declined from a peak of close to 1.4- 1.5% in Apr-May 2014 largely due to a diminished boost from food and energy prices. However, it is true that the rise in the core CPI (excluding food and energy) has not improved.”
“We think his view on whether the decline in oil prices has still not affected prices other than energy prices and inflation expectations and the type of data that form the basis for his view will be an important factor in terms of the BoJ's communication with financial market participants (ie, financial market participants' understanding of the BoJ's assessments and their expectations regarding future policy).”
“The second is his view on the conditions for CPI growth in FY3/16 to reach the forecast of 1%. His comments on when the BoJ expects inflation to bottom out and the extent of wage increases it anticipates from the spring wage negotiations coming up in March would also be noteworthy.”
“The third is his view on the JGB market, particularly his interpretation of the recent high volatility of long-term yields and whether the BoJ can continue to purchase large amounts of JGBs.”
“Through these factors, market participants would look at what options the BoJ had if additional easing becomes necessary.”