BOJ Will Stick With Ultraloose Policy: Experts

Despite inflation staying well above the Bank of Japan's 2 percent target, financial markets are skeptical about whether the central bank will make any changes to its ultra-easy monetary policy at its upcoming meeting, Mainichi Shimbun reported.

Photo Insert: BOJ Governor Kazuo Ueda was recently quoted by the media as saying the country was still far from stably achieving the bank's 2 percent inflation target.

BOJ Governor Kazuo Ueda was recently quoted by the media as saying the country was still far from stably achieving the bank's 2 percent inflation target, helping to reverse market trends triggered by growing speculation of a possible policy adjustment this month.

"In light of the risk that the BOJ may change its stance if it upgrades its inflation outlook, some investors had moved to sell bonds or buy the yen," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities Co.

"The most likely scenario is that the inflation forecast will be revised upward in July, but there won't be any policy adjustments," he added.

Makoto Sengoku, senior equity market analyst at the Tokai Tokyo Research Institute, said while the likelihood of a change in July is "decreasing rapidly," an adjustment later in the year cannot be ruled out.

"The BOJ making changes (to its yield curve control program) in line with the Fed would minimize the impact on markets. If the BOJ were to act alone after the Fed has finished its rate hike cycle, it could potentially be disruptive in far-reaching ways," said Yukio Ishizuki, senior foreign exchange strategist at Daiwa Securities Co.

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