Our scenarios for BoJ monetary policy against backdrop of "high uncertainties"
Key points
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BoJ revised down its baseline scenario in April Outlook Report; rate hike probability being priced in declined before rallying last week
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Our scenarios: [A] Virtuous cycle is maintained and rate hikes resume; [B] Virtuous cycle breaks down and rate hikes cease; and [C] Yen weakness accelerates and rate hikes resume
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While we (and most other market participants) see [A] as most likely outcome, we also need to pay attention to other scenarios
