Major Policy Settings Unchanged, Forward Guidance Tweaked & Review Launched

The BoJ leaves its major policy settings as they were, matching wider expectations, while it tweaked its forward guidance (as flagged and outlined above). Elsewhere, the Bank outlined its plan to conduct a broad-perspective review of monetary policy, which will take 1-1.5 years (this may be perceived as dovish by the market, given the elongated timeframe, although we don’t think that such a review will need to be completed for further tweaks to YCC to take place).

• The Bank introduced an increase in wages and uncertainty re: the international outlook (a hat tip to the well-documented headwinds for the banking sector) as it tweaked its forward guidance.
• The Bank’s updated economic forecasts revealed that the initial range of board member forecasts re: core-core CPI in FY25 tops out at 2.0%, although the range of 1.8%-2.0% and median of 1.8% suggests that view is clearly held by a minority. The Bank highlighted upside risks to inflation in the near-term, while flagging downside risks to the inflation outlook in the back end of its forecast period.
• All in, this decision was largely as expected, albeit with the review period re: longer run BoJ policy somewhat elongated vs. the expectations that some would have held.
• Focus now moves to Governor Ueda’s post meeting press conference, scheduled for 16:30 Tokyo/07:30 London.