BOJ: MNI BoJ Review – October 2024: Increasingly Ready For Next Hike

EXECUTIVE SUMMARY: 

• The Bank of Japan (BoJ) kept its policy rate unchanged at 0.25%, as widely anticipated. Like the unanimous September decision, today’s 9-0 vote indicated a lack of contention, contrasting with the tighter 7-2 vote to raise rates in July. Of the 53 analysts surveyed by Bloomberg, all but one expected the BoJ to maintain its policy, a view that was fully aligned with market pricing.
• The BoJ’s Outlook Report reflected only minor forecast adjustments, suggesting little change in the central bank’s economic stance. The BoJ also highlighted the importance of monitoring global economic conditions, particularly the US economy, and developments in financial markets—a key factor in the decision to hold rates steady.
• Governor Ueda reiterated the BoJ’s commitment to normalising policy if economic conditions align with projections. He emphasised that future rate hikes will be data-dependent, with timing contingent on confidence in the Bank’s growth and inflation outlook.
• At the press conference, Ueda downplayed the impact of Japanese political developments on BoJ policy.
• Most analysts, including us, anticipate a 25bps rate hike to 0.50% in January. However, an earlier move in December remains a possibility if the yen weakens further amid diminishing expectations for Federal Reserve rate cuts and a stronger US dollar.

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