Japan's new central bank governor Kazuo Ueda will see his communication skills put to test at his debut policy meeting on Friday, as markets look for clues on how soon the country's prolonged ultra-low interest rates could end.
At the meeting Ueda chairs just three weeks into his term, the Bank of Japan is widely expected to maintain its short-term interest rate target of -0.1% and a pledge to guide the 10-year bond yield around zero.
Global recession fears also cloud the outlook for Japan's export-reliant economy, giving the BOJ another reason to go slow in phasing out its massive stimulus, analysts say. Key to an orderly transition will be Ueda's ability to clearly communicate his policy intentions without upending markets. Despite Ueda's reassurances to keep YCC intact, some market players are bracing for another surprise move having been caught off guard by his predecessor's abrupt decision in December to raise the yield cap to 0.5% from 0.25%.
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