Nomura with a review of last week's Bank of Japan decision, what to watch for the yen, and a preview of the next BoJ meeting:
- The June meeting had no hawkish surprises
- The BOJ decided to reduce JGB purchases after the July Monetary Policy Meeting, with the details to be determined at that MPM.
Nomura says its difficult to see the yen shifting to a stronger move, and says that if macroeconomic developments send USD/JPY higher there could be further talk of intervention from Japanese authorities.
Nomura adds that
- Japan’s economy will likely remain on a recovery path, exceeding potential after contracting in Q1 2024.
- This year’s shunto wage hikes have proved materially higher than last year's, increasing the stickiness of inflation through 2025.
And for the next meeting (July 30 and 31):
- We expect the BOJ to hike rates in October 2024, with a risk of it being frontloaded to July.
BoJ Ueda
