The Global Strategy Team at TD Securities (TDS) offers a brief preview of the upcoming Bank of Japan (BoJ) monetary policy meeting, scheduled during the Asian session on Friday.

Key quotes:

“We expect no changes in policy from the BoJ at its 28 April meeting. Governor Ueda has maintained the BoJ's dovish stance, highlighting that the Bank will stay the course until 2% inflation is sustainably reached (which we deem as a positive output gap).”

“While we think Ueda's next move will be a further adjustment of the yield curve target band, he appears in no rush to make such an adjustment, saying it's appropriate to maintain YCC "for now". Recent reports suggest BoJ officials are also wary of adjusting policy so soon after recent banking stress overseas. That said, we think the BoJ will not provide advance warning of a change and think the risk of a YCC shift should not be fully ruled out at this meeting.”

“At a minimum, we would expect the BoJ to offer guidance on YCC and announce a review. This should not come as a surprise as this has been communicated recently, but this time Ueda will have more flexibility to nuance the messaging now that he is fully in charge. And with the Shunto wage negotiations revealing higher than expected salary increases, and a back-up in 10y yields to close to the 0.5% top end of the YCC band, it suggests that the BoJ may still act in the months ahead. We think a move by June appears likely, which may take the form of a further widening to 0.75% or even 1%.”