MNI BoJ Review – September 2024: Policy Steady But Hike Stance Intact

EXECUTIVE SUMMARY

• The Bank of Japan (BoJ) held its Monetary Policy Meeting (MPM) on September 19-20, maintaining the policy rate at 0.25%, as unanimously expected. The 9-0 vote indicated a lack of contention within the MPC, contrasting with the 7-2 split seen in July’s rate hike decision.
• The BoJ's statement was relatively upbeat, with most of the language unchanged from the July outlook report. The bank's commitment to a rate-hike stance remained firm, provided the economic and price outlook aligned with expectations, despite the US turning to a policy rate reduction.
• During the post-meeting press conference, Governor Ueda emphasised that the BoJ remains prepared to adjust its policy if the price stability outlook is achieved and the economy improves in line with forecasts.
• However, Ueda indicated that there was no immediate urgency for another hike. His comments seemed to suggest a measured approach rather than scepticism toward future hikes, with the BoJ continuing to assess the effects of this year’s rate increases.
• Before the decision, a Bloomberg survey had shown that most forecasters anticipated a rate hike in December, while a more hawkish minority expected an October hike. However, these hawkish expectations were dampened after Ueda highlighted the importance of October’s service price data and noted that inflationary risks had eased since the yen's recent strengthening.
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BOJ Review - Sep 2024.pdf