James Smith, Economist at ING, suggests that after the BoJ maintained its status quo in today’s policy decision, attention will now turn to April’s meeting when they release their quarterly outlook report, although it may still be too early to expect a further rate cut. Key Quotes “The BoJ held off on expanding monetary stimulus at their March meeting, although they outlined the “operational details” of negative rates. This included exceptions for money market funds, confirming reports by Reuters from the weekend. Ultimately, the BoJ probably wanted to more time to see how the dust settles on negative rates (Gov. Kuroda said in the press conference that “some time” may be needed to gauge the impact of negative rates). At its next meeting in April, the BoJ will release its quarterly outlook report and it is on these occasions when they have historically made policy changes. The economic backdrop is unlikely to get any better before then, particularly given that the BoJ’s preferred measure of core inflation looks to have peaked and is likely to trend back down below 1% over the coming months. The domestic economic outlook remains fairly uncertain and spring wage talks appear to have been fairly muted (something which the BoJ had earlier flagged as a key risk). This will keep pressure on the Policy Board to act, but the way in which they act depends very much on how the market’s perception of negative rates evolves over the next six weeks. As Gov. Kuroda himself said in the press conference, there are “various opinions” on the subject. Although in the longer term, rate cuts are likely to be the BoJ’s favoured policy tool, we think that their short-term choice may be to expand stimulus through additional purchases of ETFs or corporate bonds if negative rates remain unpopular.” For more information, read our latest forex news.