The Bank of Japan is kicking off a hefty central banking week on Monday. Analysts expect that the coronavirus may offer policy makers in Tokyo a justification to scrap what has become an obsolete, largely symbolic bond-buying target as it takes stronger action to cushion the economic blow from the pandemic.
Though they also predict that the BOJ will move closer to debt monetisation, or direct underwriting of government debt, as Japan joins other countries in deploying unprecedented spending to combat the widening fallout of the health crisis.
Meanwhile, on Wednesday, the focus will shift to the U.S. Federal Reserve’s monetary policy meeting. In recent months, the Fed has slashed rates to near zero, restarted bond purchases and rolled out an unprecedented range of programs to keep credit flowing and shore up business and household confidence, bulging its balance sheet to a record $6.42 trillion.
While the meeting is expected to be less dramatic than the emergency one in March, investors expect to get more details on the Fed’s special lending programs, its asset-purchase program and the forward guidance on the target range for the federal funds rate, analysts said.