The Bank of Japan (BOJ) will schedule its latest monetary policy meeting decision approximately at 03:00 GMT on Monday.
The central bank, which is already running a massive easing program since 2013, is expected to announce a plan to aid corporations facing funding problems, according to Nikkei Asian Review. Also, the central bank may promise to buy an unlimited amount of bonds.
Ahead of the event, TD Securities analysts said:
“The BOJ could announce an enhanced” credit easing/loan subsidies alongside an increase to corporate bond purchases are a near certainty, as is the removal of its QE ‘target’ and de-emphasis of price momentum/inflation. Expect an affirmation of open-ended buying as a tacit endorsement of MOF spending.”
The media reports suggest BOJ may consider upping many of its existing facilities including corporate bond purchases (up to 15tn yen) and expanding its loan program to small and medium-sized enterprises.
TD Securities analysts added,
“Both of these are a near certainty and we suspect that the BOJ intentionally floated these programs in the media to see how well the market would entertain the idea.”
How could it affect USD/JPY?
The Yen may come under pressure if the Bank of Japan announces open-ended QE. The losses, however, would be short-lived, as the BOJ is now running an ultra-easing program for over seven years.
NDDFX’s Valeria Bednarik said:
“The USD/JPY pair is hovering around 107.60, marginally lower in the day. The 4-hour chart shows that the neutral stance persists, although with the downside potential gaining some support, as the intraday spike was rejected by sellers aligned around a flat 100 SMA. The 20 SMA converges with a Fibonacci resistance at 107.70, while technical indicators lack directional strength, the Momentum still around its mid-line and the RSI currently at 47.”
About BoJ Rate Decision
BoJ Interest Rate Decision is announced by the Bank of Japan. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the JPY. Likewise, if the BoJ has a dovish view on the Japanese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.