The Bank of Japan didn’t alter policy settings at today’s meeting. With economic activity set to disappoint the Bank’s overly optimistic forecasts and wage growth slowing again, the case for abandoning Yield Curve Control is looking less compelling. However, the policy still looks unsustainable and the government is seeking a helping hand from the Bank of Japan to rein in high inflation. Accordingly, we now expect the Bank to ditch Yield Curve Control at incoming Governor Ueda’s first meeting in late-April.
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