- Japan’s economy expected to keep growing moderately
- There is a risk that underlying inflation will deviate upwaard to level above the 2% mark
- BOJ expected to keep raising interest rates, adjusting degree of easing
- This will be in response to economy, prices, and financial developments
- To consider timing and pace of rate adjustment while taking a variety of factors into consideration
- That inclues likelihood and risks of achieving economy, price outlook
- Necessary to pay attention to FX developments and its impact on economy, prices
- No comment on daily market moves
- Need to pay close attention to events in the Middle East and its impact as well
- Japan’s financial conditions remain accommodative even after latest rate hike
- It will take considerable time until impact of rate hike spreads to economy, pricces more broadly
- Will aim to sustainably, stably achieve inflation target
- It is more important than ever to be mindful of risks of inflation overshooting
There’s nothing in there that we don’t already know about the BOJ and their policy stance. The decision today mainly reaffirms that and he also doesn’t really touch much on the latest FX moves, as you would expect.
At the balance, markets continue to expect no change for the next meeting in September. The odds of that are showing ~77% pricing of no change to the BOJ policy rate. However, things do shift when we get to October pricing afterwards. In entering Q4, traders are pricing in ~64% odds of a rate hike for the October meeting with ~25 bps of rate hikes priced by year-end for now.
This article was written by Justin Low at investinglive.com.