BoJ expected to loosen policy further at Friday's meet

Bank of Japan's (BoJ’s) two-day Policy Board meeting concludes on Friday, at which a modest cut in the policy rate further into negative territory is expected. In addition to the monetary easing from the BoJ, the Japanese Government is likely to announce a substantial fiscal stimulus package

Data released earlier today showed a notable decline in the value of exports in the first ten days, down almost 21 percent compared with a year earlier. Indeed, the yen appreciated sharply at the start of the month to its firmest in trade-weighted terms since the start of 2013. BoJ is likely to react to sluggish growth outlook, low inflation and strong JPY appreciation seen this year.

“We expect the Bank of Japan (BoJ) to cut its policy rate by 20bp to -0.3 percent and expect additional qualitative measures, including an upscaling of ETF and J-REIT purchases. We believe our forecast of BoJ easing will be a moderate positive surprise to the market compared with current pricing,” said Danske Bank in a report.