Pacific Investment Management Company piece is titled: BOJ: Rethinking the Mandate
- It is not realistic to assume that the BOJ's current 2% inflation target can be met, at least in the foreseeable future, following the BOJ's four-year struggle to lift inflation through unprecedented monetary easing.
And thus:
- Understanding the BOJ's next game is key for investors.
It's a long detailed article, but to jump to the conclusion:
POLICY OUTLOOK AND INVESTMENT IMPLICATIONS
- To conclude, no matter who is the next BOJ governor, we think the BOJ will take a back seat on policy, look for opportunities to adjust its yield-curve targets higher, and become more flexible on the 2% inflation target.
- Any adjustment process will be gradual and unlikely to start until the CPI is rising by 1%, so BOJ liquidity should continue to provide marginal support for global markets.
- Yet it is important to avoid being complacent; any adjustment to the 10-year yield target would be unprecedented and therefore may not be a smooth operation.
(Bolding is mine)
ps. I happen to agree with PIMCO on this, especially on the BOJ to revise its 2% target at some stage. So, given that they PIMCO is confirming my bias, I'll try to dig up some opposing views.
Krafty Kuroda Keeping Kwiet
