The Bank of Japan’s (BOJ) overnight rate remains at zero percent. The BOJ is scheduled to meet on Sept. 8, but analysts do not expect any formal shift in monetary policy at that time. However, rumblings are circulating in the financial markets that the BOJ may begin to shift monetary policy in other ways.
“The BOJ will be moving toward a tighter monetary policy,” says Jason Bonanca, currency strategist at Credit Suisse First Boston.
The first BOJ move may come in the form of a lower target for the current account deficit, some analysts believe. “The bottom line is that anything that shrinks the size of a central bank balance sheet is a tightening,” Bonanca says.
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