Today the minutes of the April 27-28, 2023, Bank of Japan meeting were released. Below in italics are the top ten highlights generated by our AI engine.

1. The Bank of Japan (BoJ) has been conducting purchases of various financial instruments and providing funds without setting an upper limit. This includes Japanese government bonds, ETFs, Japan real estate investment trusts, CP, and corporate bonds.
2. The pace of recovery in overseas economies has slowed, with the exception of China and Europe. The U.S. economy is on a slowing trend, and exports have slowed, particularly of IT-related goods.
3. Japan’s economy has picked up and is expected to recover moderately by mid-2023. Despite the slowdown in overseas economies, exports and production are expected to return to an uptrend.
4. Private consumption has increased moderately and is expected to continue increasing, supported by household savings. The employment and income situation has improved moderately.
5. Japan’s financial conditions have been accommodative, with firms’ demand for funds rising moderately and issuance conditions for corporate bonds favorable.
6. The Policy Board discussed the current economic situation and agreed that there are high uncertainties surrounding global inflationary pressure and the course of monetary policy in each economy.
7. The Bank of Japan should continue to impose low interest rates and monitor price and wage developments, but it should also consider whether households, firms, and financial institutions are well prepared to deal with future changes in interest rates.
8. Members agreed that risks to economic activity and prices were balanced for fiscal 2023, but negative for fiscal 2025.
9. The Bank of Japan decided to continue with large-scale JGB purchases and make nimble responses for each maturity by increasing the amount of JGB purchases and conducting fixed-rate purchase operations, and to keep 10-year JGB yields at around zero percent.
10. The Bank of Japan has been implementing monetary easing measures to achieve price stability for 25 years, but has decided to conduct a broad-perspective review of monetary policy.

The net of the meeting suggest the BoJ sees every reason to continue with accommodative monetary policy. In anticipation of the release of these minutes, the JPY broke through 140, where it held for the last month.

This accommodation has served as a detriment to the value of the Yen. Current easy financial conditions suggest we may retest the 150 level on the Yen.

The saving grace for the Yen here may be item #10, where the BoJ states that it has decided to do a comprehensive review of its monetary policy. I think one can read this as Japan is thinking about thinking about abandoning yield curve control. Should traders begin to discount that prospect, the Yen could have a powerful reversal as Japanese citizens bring capital home.

According to a recent Nikkei Asia article, Japanese citizens engaged in 12 quadrillion Yen ($87.3 billion) in 2022, the highest level ever. “Mrs. Watanabe” accounts for 28% of global FX trading according to the article. Any change to BoJ policy that encourages capital to return home would seem to have a significant impact of global capital and FX markets. But for now, the BoJ continues to take it easy.