Bank of Japan likely to keep stimulus unchanged at next week's meet

Bank of Japan is scheduled to meet next week to decide monetary policy and expectations for further action at the Oct 31-Nov 1 gathering are lower than at the September meeting. At its two-day meeting ending on Tuesday, 1st Nov, the central bank is expected to keep unchanged its minus 0.1 percent short-term interest rate target.

The central bank is also scheduled to provide updated inflation and economic growth forecasts as part of its quarterly evaluation. Analysts expect the central bank to cut next fiscal year's inflation forecast slightly, reflecting weak consumption and falling import costs from a strong yen. The review may also extend the timeframe for hitting its ambitious inflation target beyond Kuroda's five-year term that ends in April 2018.

In September, the BOJ shifted the focus of its monetary policy framework to controlling the yield curve by actively guiding the 10-year yield around zero. BOJ officials believe the yield curve control is working smoothly for now. Bond markets have remained stable even as the bank slightly trimmed its purchases of super-long bonds this month.

Kuroda said on Oct. 21 in parliament that he doesn’t see the immediate need to back away from 80 trillion yen ($765 billion) for annual bond-buying, but that in the future it may not be necessary to buy that amount.