Comments from a morning note from ING, first on the CPI data earlier:
- unlike other major economies, Japan’s inflation hasn’t yet reached its peak
- Headline inflation will continue to go down slowly due to base effects and falling global commodity prices, but core inflation will remain high for a considerable time.
And on the Bank of Japan:
- We expect the BoJ to leave its policy rates unchanged, but we think there is a good chance of a YCC policy change at today’s meeting, which is a non-consensus view - the market believes that October is more likely.
- If the BoJ seeks to normalize its policy in the future, we think that delaying a YCC policy adjustment will create a larger burden for them.
- The BoJ will also release its quarterly macro outlook today, and the focus will be the inflation outlook for 2024. We think that this is how the BoJ will assess the sustainability of inflation in this cycle and will be a good indicator against which to estimate the timing of the BoJ’s first rate hike move.
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Earlier:
- Economic calendar in Asia - BOJ policy tweak day! (maybe).
- Bank of Japan preview - DB says YCC tweak a 40% probability
- The yield on the 10 year Japanese Govmnt Bond has risen above the BOJ's tolerance band top
USD/JPY swings so far today:
