A BOJ ‘mega surprise’ could come even without boosting stimulus

SINGAPORE (July 27): In the roulette game of Bank of Japan policy forecasting, most players are betting on Governor Haruhiko Kuroda to double down on some or all of his current three main policy tools on Friday.

If he follows through on those calls, that would mark the first time that Kuroda, a former head of currency policy at the Finance Ministry, would fail to surprise market participants. He unleashed a much bigger framework than anticipated in April 2013, unexpectedly expanded it in October 2014 and dumbfounded observers in January 2016 by unveiling a negative interest rate tactic that he had previously dismissed.

Given the premium that the BOJ chief has placed on affecting expectations in his battle to eradicate Japan’s "deflationary mindset," some are warning that just doing more of the same when that’s what most anticipate won’t be enough to address waning inflation trends.

---

Related Stories

• Japan’s three-day meltdown rewrites records; analysts debate Fed inter-meeting cuts
• BofA sees yen dropping to 160 per USD if Fed delays cuts
• BoJ's further loosening of grip on yields disappoints yen bulls

---