Bank of Japan: No meaningful tightening seen until 2019 - Wells Fargo

The Bank of Japan will meet on Thursday. Analysts from Wells Fargo, do not envision any kind of tightening from the central bank in a meaningful way at any point through the end of 2019. 

Key Quotes: 

“Unlike many of the developed world’s central banks, the Bank of Japan (BoJ) has shown few signs of taking its foot off of the accelerator. This continued stimulus comes at a time when the Japanese economy is doing reasonably well. We expect the Japanese economy will end up growing 1.5 percent for full-year 2017. If realized, that would mark the fastest rate of GDP growth since 2013.”

“We do not currently envision the BoJ tightening policy in a meaningful way at any point through the end of our current forecast horizon (2019). Unlike many of the world’s other major developed economies, Japan has faced more severe deflationary episodes in its recent history in addition to struggling with severe structural challenges related to demography and other factors. Thus, we believe monetary policymakers in Japan are likely to wait until deflation and razor thin margins between expansion and contraction are banished before reversing course.”