BOJ: On Hold As Expected, Further Tightening Likely, Timing Uncertain

As widely expected, the BoJ kept rates on hold at 0.25%.

•  In terms of the central bank forecasts, for core CPI in financial year (FY) 2025, it was nudged down to 1.9% from 2.1% previously, the 2024 and 2026 forecasts at 2.5% and 1.9% respectively were unchanged. The Core CPI ex energy forecasts were unchanged for 2025 at 1.9% and 2.1% for 2026. The 2024 forecast was nudged up to 2.0% (from 1.9% prior).
• The BoJ still stated that there are upside price risks for the 2025 FY forecast.
• On growth, there was little change in the forecast profile. The 2025 FY projection was raised to 1.1% from 1.0%.
• The central bank stated that price trends look to be in line with its 2% goal in the second half of the forecast period. It also described real rates as a significantly low level. The cycle of rising wages and inflation is likely to continue, while medium term inflation expectations were described as rising moderately.
• Equally the BoJ noted that uncertainty around the economy, prices and their respective outlooks remains high.
• Hence this gives the BoJ time to assess developments, something which Governor Ueda alluded to recently.
• The bias is clearly for the BoJ to remove easy financial conditions further. We didn't get much fresh insight on the timing of such a shift though.
• Next up is Ueda' press conference, 3:30pm local time (6:30am BST).