Bank of Japan October 2022 monetary policy statement

The two main policy planks are:

  • the minus 0.1% target for short-term interest rates
  • the target for the 10-year bond yield at around 0% (+25bp ceiling, with a pledge to conduct unlimited, daily, fixed-rate bond-buying operations in its defence)

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Outlook report, key forecasts:

    • Core-core CPI median forecast for fiscal 2022 at +1.8 vs +1.3% in July
    • Core-core CPI median forecast for fiscal 2023 at +1.6%vs +1.4% in July
    • Core-core CPI median forecast for fiscal 2024 at +1.6% vs +1.5% in July
  • Real GDP median forecast for fiscal 2022 at +2.0% vs +2.4% in July
  • Real GDP median forecast for fiscal 2023 at +1.9% vs +2.0% in July
  • Real GDP median forecast for fiscal 2024 at +1.5% vs +1.3% in July

Commentary from the report:

  • Japan's economy likely to recover as impact of pandemic, supply constraints subsides
  • Uncertainty regarding japan's economy extremely high
  • Risks to price outlook skewed to upside
  • Risks to economic outlook skewed to downside
  • Must be vigilant to financial, currency market moves and their impact on japan's economy, prices
  • Japan's economy is picking up
  • Japan's inflation expectations heightening
  • Consumption increasing moderately
  • Japan's core consumer inflation moving around 3% due to rising energy, food, durable goods prices
  • Overseas economies showing signs of slowdown due to global inflationary pressure, central banks' interest rate hikes
  • Japan's economy to recover due to expected rise in pent-up demand, despite headwinds from overseas economic slowdown
  • Corporate profits likely to remain at high levels due to pent-up demand, positive effect of weak yen

  • Core consumer inflation likely to slow pace of increase toward middle of next fiscal year

  • Japan's output gap to turn positive around latter half of fiscal 2022

Of more significance is this:

  • UNDERLYING RISE IN INFLATION LIKELY TO HEIGHTEN MEDIUM-, LONG-TERM INFLATION EXPECTATIONS AND LEAD TO SUSTAINED RISE IN INFLATION ACCOMPANIED BY WAGE GAINS

  • BOJ WILL REVIEW ETF BUYING

Thos two in bold as it you are looking for a pivot from the BOJ that's about it for this meeting.

boj

The full text of the statement is here