Commonwealth Bank of Australia with thier response to the Bank of Japan yesterday, in summary:

  • The Bank of Japan (BoJ) kept its policy rate unchanged at - 0.1% and the 10 year Japanese government bond (JGB) yield target unchanged at 0%.
  • The previous 1% hard upper limit for the 10 year JGB has been removed. Instead the 1% level will be viewed as a reference. Yield curve control is still in place.
  • CPI inflation forecasts were revised higher. However the FY25 CPI forecast is 1.7%, below 2% target.
  • We maintain our forecast that the BoJ will leave interest rates on hold until Q2 2024 at the earliest.

And:

  • Overall the inflation forecasts and still-dovish policy guidance suggest the BoJ is unlikely to tighten monetary policy in any meaningful way. We maintain our view that the BoJ will not lift interest until there is evidence of a large Shunto wage increase flowing through to economy-wide wage increases. The earliest we envisage a policy tightening is Q2 2024 after the Shunto agreement in April 2024. However we do not rule out further changes to yield curve control.
Japan jgb 10 year yield curve control Bank of Japan