The posts from earlier are here:
- Bank of Japan leaves rates unchanged, as expected
- Bank of Japan comprehensive review on past monetary easing steps
- USD/JPY jumps above 155.20 after BoJ votes 8 - 1 to leave rates unchanged again
But if you want a quickie rundown:
Interest Rates Held Steady: The BOJ kept its short-term policy rate unchanged at 0.25%, with an 8-1 vote among its board members.
Dissenting Vote: Board member Naoki Tamura, a policy hawk, proposed raising rates to 0.5%, citing rising inflationary risks. His proposal was voted down.
Future Rate Hikes Expected: Markets anticipate the BOJ will raise rates early in 2025, with most expecting a hike to 0.5% by March.
Economic Conditions:
- Japan’s economy is recovering moderately, with some weaknesses.
- Consumption is increasing, but uncertainty around U.S. policies and slowing demand in China could weigh on growth.
- Annualized GDP growth slowed to 1.2% in Q3, with consumption rising a modest 0.7%.
Inflation Trends:
- Core inflation has fallen from a peak of 4.2% in January 2023 to 2.3% in October.
- Wage growth, currently at 2.5%-3%, is expected to continue amid labor shortages, supporting the BOJ’s gradual rate hike strategy.
Market Reaction:
- The yen initially fell to a one-month low against the dollar before recovering slightly.
- Investors are watching BOJ Governor Kazuo Ueda’s press conference for clues on the timing of the next rate hike.
Background:
- The BOJ ended negative interest rates in March 2024 and raised its policy target to 0.25% in July.
- Future hikes depend on wage growth and inflation aligning with the BOJ’s projections.
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Next up we will have the press conference from Bank of Japan Governor Ueda. This is due at 0630 GMT (0130 US Eastern time) and I expect Ueda to sound a hawkish note or two.
USD/JPY update:
