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Timing of Bank of Japan meeting is ‘ominous’: Analyst

Note the timing of Bank of Japan meeting

The Bank of Japan starts a two-day meeting Tuesday with any policy announcement not expected to reach investors until after markets close in Tokyo Wednesday.

The following two days leading to the weekend are holidays in Japan leading one analyst to speculate that this could be the perfect time for the central bank to announce market-sensitive changes.

"The timing is ominous. If there is going to be a market-upsetting sea change of Bank of Japan [BOJ] policy, it is best to announce it just as markets close for a an extra day or two and insecurity can settle down a bit," said HFE chief economist Carl Weinberg in a note Friday.

Weinberg said any likely action by the BOJ is hard to nail down.

"We do not know what the BOJ has up its sleeve. However, we are pretty sure it is running out of bonds to buy, with 40 percent of the total JGB market already in its coffers.

"We are also sure that the big pools of money and the banks are all over the BOJ to put an end to the negative interest rates and perpetually falling yield curves that are driving them out of business," reads the note.

Weinberg told CNBC Monday that Japan may not be ready for a sudden change in central bank policy.

"We are probably going to see the BOJ cut back on its quantitative easing and long-term interest rates will rise at points in the business cycle where the economies are really not ready for tightening.

"I think that is going to be really uncomfortable and set off a process of much slower economic growth than anyone wants to see," he said.

Maya Bhandari, Multi Asset Fund Manager at Columbia Threadneedle Investments said it may yet be while yet before Japan sees tightening of monetary policy.

"The BOJ hasn't run out of ammunition and one of things we may get from the Bank of Japan this week is another cut," she told CNBC Monday.

"What we are hearing from them is they explicitly want to steepen the yield curve which is different and new. It will be interesting to see how that plays out.".

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