Barclays expects the Bank of Japan to end its negative interest rate policy by July 2019, but continue its government bond purchase program and to extend its 10-year bonds in April next year. The bank's main reason for the Bank of Japan's attempt to get rid of the negative interest rate policy was to avoid the side effects of this on the profits of financial institutions.
The Bank of Japan is likely to stress that taking such a decision is not conclusive proof that the economy is nearing the desired targets and monetary tightening is starting, as inflation stabilizes below 2%. Ultimately, the end of the negative interest rate could lead to a slightly higher JPY, as the USDJPY is expected to see a gradual decline.
