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MNI BoJ Preview - October 2024

The BoJ Policy Board is meeting on October 30-31, with an anticipated unanimous decision to maintain its current policy.
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EXECUTIVE SUMMARY: 

  • The Bank of Japan (BoJ) Policy Board is meeting on October 30-31, with an anticipated unanimous decision to maintain its current policy rate at 0.25%. A hold is also expected by all, but one of the 53 analysts surveyed by Bloomberg, with market pricing aligning with this expectation.
  • Since April, the BoJ’s guidance has indicated a gradual rate increase if economic activity and inflation trends align with the central bank’s projections, stating that the real policy rate is currently too low relative to neutral levels.
  • However, an additional precondition for future rate hikes has emerged, emphasising stability in overseas economies and financial markets, especially the US. Given these factors, the BoJ appears inclined to monitor US economic stability and market volatility a bit longer before making further policy adjustments.
  • Looking ahead, consensus forecasts suggest a rate increase to around 0.5% in either December or January, assuming a stable US economy. January may be optimal for a rate move, as it coincides with the next Outlook Report and provides time to evaluate underlying price trends following October’s price revisions. However, a rate hike in December remains plausible if the yen weakens further after the US presidential election.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: BOJ Preview - Oct 2024.pdf

 

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EXECUTIVE SUMMARY: 

  • The Bank of Japan (BoJ) Policy Board is meeting on October 30-31, with an anticipated unanimous decision to maintain its current policy rate at 0.25%. A hold is also expected by all, but one of the 53 analysts surveyed by Bloomberg, with market pricing aligning with this expectation.
  • Since April, the BoJ’s guidance has indicated a gradual rate increase if economic activity and inflation trends align with the central bank’s projections, stating that the real policy rate is currently too low relative to neutral levels.
  • However, an additional precondition for future rate hikes has emerged, emphasising stability in overseas economies and financial markets, especially the US. Given these factors, the BoJ appears inclined to monitor US economic stability and market volatility a bit longer before making further policy adjustments.
  • Looking ahead, consensus forecasts suggest a rate increase to around 0.5% in either December or January, assuming a stable US economy. January may be optimal for a rate move, as it coincides with the next Outlook Report and provides time to evaluate underlying price trends following October’s price revisions. However, a rate hike in December remains plausible if the yen weakens further after the US presidential election.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: BOJ Preview - Oct 2024.pdf