7 Sep 2015
BOJ in focus after dovish ECB – Nomura
FXStreet (Delhi) – Yujiro Goto, Research Analyst at Nomura, notes that all eyes will be on BOJ after we had a dovish stand from ECB in the past week. Global markets are likely to focus on the divergence in the ECB and BOJ’s policy stance in the near future.
Key Quotes
“Market expected a strong recovery in wage inflation in July (consensus: +2.0%), but the actual recovery was much weaker than the market forecast. Although the headline wage inflation number has been disappointing, BOJ Governor Kuroda can focus on the positive side of the data, while ignoring weakness in headline wage inflation.”
“Real wage inflation rose +0.3% from a year ago, the first positive number since April 2013. Even though the recovery in real wage inflation is largely owing to the disappearing negative impact from sales tax hikes, Governor Kuroda may view this as a positive sign for the economic outlook.”
“Although not our central case, the continuous deterioration in risk sentiment could test the BOJ’s commitment to supporting inflation expectations, after the ECB showed stronger commitment.”
Key Quotes
“Market expected a strong recovery in wage inflation in July (consensus: +2.0%), but the actual recovery was much weaker than the market forecast. Although the headline wage inflation number has been disappointing, BOJ Governor Kuroda can focus on the positive side of the data, while ignoring weakness in headline wage inflation.”
“Real wage inflation rose +0.3% from a year ago, the first positive number since April 2013. Even though the recovery in real wage inflation is largely owing to the disappearing negative impact from sales tax hikes, Governor Kuroda may view this as a positive sign for the economic outlook.”
“Although not our central case, the continuous deterioration in risk sentiment could test the BOJ’s commitment to supporting inflation expectations, after the ECB showed stronger commitment.”