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Shirai (ex-BoJ) tries to derail USDJPY recovery

Sayuri Shirai, former Bank of Japan board member referred to the new policy framework and Japansese QE program during a conference in Tokio. When she was still at BoJ she consistently voted in line with Kuroda but opposed negative rates in January. Her views may be assumed to be more ’honest’ due to her not being a BoJ member any more.

  • BoJ bond buying to the tune of 80 trn JPY is unsustainable. Gradual reduction to 60 is needed
  • the new framework is in fact an implicit tapering, the new framework  is in concept a move towards tapering (this is what the markets feared ahead of the last BoJ meeting and the issue we covered in the currency report on JPY released at that time) 
  • the new framework is tto complicated, reduces transaprency, may have limited effectiveness, is a source of new riskson the bond market.

This was enough to send USDJPY 0.4 figure lower in a quick manner. SUch rhetoric is also Nikkei (JAP225) negative.

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 The next meeting is on 31-Oct/1-Nov. Yesterday we got a comment from Masai (actually the first interview since she joined on 30-Jun). She claimed that even if the new projections show more delay in the return of CPI to its goal this will not be a case for more easing. It seems to us that the recent stability of Japanese markets and USDJPY in particular made BoJ members more open to try to set expectations for stabilization of policy (instead of the constant push by markets for more easing).


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