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BoJ likely to stay on hold for the rest of 2014 - Standard Chartered

FXStreet (Bali) - The BoJ is likely to stay on hold for the rest of 2014, notes Standard Chartered Research Team.

Key Quotes

"Our base-case scenario is that the BoJ will keep its current monetary easing programme unchanged for the rest of 2014. With the government likely to go ahead with the second sales-tax hike in 2015, the BoJ is likely to be more willing to extend its ultra-aggressive monetary easing beyond Q1-2015."

"The latest comments from key BoJ board members suggest they remained comfortable with the current economic momentum even after a contraction in Q2 as they had expected it. They have expressed the view that monetary easing is having the intended impact on the economy and that the contraction will be temporary."

"The BoJ will meet and conduct its semi-annual review of its GDP and CPI forecasts on 31 October. We see a possibility that the board will revise down its GDP growth forecast for FY14 (began in April 2014), but do not expect this to trigger further monetary easing at the meeting. That said, downside risks to the economy could prompt the BoJ to ease earlier than we expect, either later this year or early next year."

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