BoJ may be planning more negative NIRP – AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, suggests that the JPY has led the recent rebound in the USD since the Jackson Hole Symposium and apart from speculation over a possible rate hike by the Fed, the outlook for BoJ policy is also generating renewed focus. 

Key Quotes

“BoJ’s Kuroda has argued he has further scope to ease policy and mounted a defense on the effectiveness of his NIRP and QE policies at Jackson Hole.  We have argued several times this year that the strength of the JPY has been a key element driving broader market trends towards a weaker USD and a global scramble for yield. 

Furthermore, it is perhaps the most important factor undermining the effectiveness of BoJ monetary policy.  A Japanese government advisor on Monday made the same points and passionately called on the MoF to step into the game and use FX intervention policy to support BoJ policy measures.

Fed’s Fischer hinted that the BoJ may reinvigorate its commitment to NIRP, and Kuroda made it clear that there is still significant scope to lower rates further. We can see scope for the BoJ with tacit support from the MoF to finally turn the tide for the JPY this year.”