The Bank of Japan agreed to hold the last meeting of major central banks scheduled next week. This is because the stimulus of the BoJ remains to be at a fast pace despite labor market progress and boost in bank lending, and the balance sheet expanded as to the gross domestic product of Japan. The main reason behind the slow policy ‘normalization’ of the BoJ is the appreciation of the Japanese yen, that affects the cyclical tailwinds of growth. Some of the bank’s policymakers provided indirect hints to make the markets ready for future exit from the policy, as short-term rates were kept negative and fix the 10-year yield to zero percent. However, investors are expecting for some support around the exit plan during the meeting next week. According to forecast, initial changes happen via a slight increase in the 10-year yield target despite its low possibility due to subdued wage growth and inflation stayed under the 2% target of the BoJ.
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