Even if the BoJ stays on hold as expected at the upcoming meeting, it probably needs to revise both its growth and inflation outlook, as well as its projected timeline (around 1H FY16) for achieving the price stability target.
Weak indicators since the summer have at the very least cast doubt on the BoJ's optimistic outlook. The risk is not large that JPY would suffer a sustained rally beyond 1-2pt in a short period of time if the BoJ does not ease as various indicators suggest light positioning.
"But one of the reasons USD/JPY has been relatively resilient even as expectations of a Fed rate hike have ebbed is the BoJ's zeal in achieving 2% inflation as soon as possible. As such, if the BoJ revises its outlook down, but leaves policy unchanged, US and Japanese monetary policies would be perceived as diverging less and the Kuroda put might be less feared by the yen bulls", says Bank of America.
That said, Kuroda can most likely keep to market expectations to a good extent by reaffirming the BoJ will not hesitate to implement easing if necessary, which allows to keep the directional scenario for higher USD/JPY (though lower level-wise) even in the case of a hold.


Japan Inflation Expectations Rise as BOJ Rate Hike Timing Faces Uncertainty
ECB Signals Possible Interest Rate Move if Inflation Outlook Fails to Improve
Eurozone Recession Risks Rise as Middle East Conflict Threatens Growth, ECB Official Warns
FxWirePro: Daily Commodity Tracker - 21st March, 2022
ECB Rate Outlook: Ceasefire Eases Pressure but Hikes Still Expected in 2026
Paraguay Holds Interest Rate at 5.5% as Inflation Remains Stable Amid Global Uncertainty
RBA Raises Interest Rates to 4.35% Amid Rising Inflation Risks and Middle East Tensions 



