Japan: The BOJ needs to act – Nomura

Research Team at Nomura, expects the BOJ to ease this week, as widely anticipated by the market.

Key Quotes

“In our view, the BOJ is still unlikely to embark on “helicopter money”-type policy; instead, we think “more conventional” unconventional policy tools are likely. As market expectations are already high, a consensus-like policy package may not have a sustained depreciation impact on the JPY, but easing is still necessary to avoid JPY appreciation toward 100 or below.

On recent BOJ announcement days, USD/JPY has been more correlated with Japanese equity prices than rate spreads. Thus, positive surprises from the size of ETF purchases could have a more sustained JPY weakening impact, while a bigger rate cut could have more mixed implications as concerns over banking stocks may increase further.”