BoJ remains on hold, USD/JPY seen at 105 – UOB
Researchers at UOB Group now see the pair around 105 in the near term, while the BoJ is expected to refrain from acting for the time being.
Key Quotes
“The Bank of Japan (BoJ) decided to keep policy unchanged for the 12th consecutive meeting in its March 2018 policy statement. And the decision was again not unanimous with board policy member, Goshi Kataoka, the sole dissenter for the 5th time in a row”.
“The BoJ retained most of its upbeat economic outlook with the exception of the downgrade in housing investment assessment. Its optimistic inflation outlook remains intact and BoJ still expects Japan continue to head towards 2% price growth target (“likely be around fiscal 2019”)”.
“Even as BoJ chooses to maintain status quo, uncertainty will continue to cloak its monetary policy outlook in 2018 as the specter of “BoJ normalization” lingers in the market psyche. The re-appointment of Kuroda for a second term as BoJ Governor failed to shift market sentiment that Kuroda will stay the course and keep BoJ monetary policy broadly “expansionary till 2% is met”.
“We continue to highlight the risk of near-term yen strength and that the USD/JPY could head downside towards 105 by end-1Q18”.