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STIR: BoJ Dated OIS Firmer After Gov. Ueda’s Remarks Yesterday

STIR
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BoJ-dated OIS pricing has firmed across meetings following the BoJ's highly anticipated decision to hold rates steady yesterday. 

  • Prices have firmed by 2-5bps compared to Wednesday’s closing levels. BoJ Governor Kazuo Ueda left the possibility of a rate hike in December open, noting that downside risks to the U.S. economy had diminished, though he highlighted new concerns linked to next week’s presidential election.
  • “If the probability of achieving our economic and inflation targets increases, it will lead to a rate hike,” Ueda stated, citing strong recent U.S. data as a reason for not needing to reiterate the bank's previous caution about taking time to monitor risks.
  • However, Ueda emphasised that the BoJ does not have a predetermined path for raising the policy interest rate from 0.25%. He underscored that policymakers will assess the need for rate hikes at each meeting based on the latest available data.
  • Currently, markets are assigning a 25% chance of a 25bp hike in December, with the probability rising to a cumulative 60% by January. A full 25bp increase is not priced in until June 2025.

 

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BoJ-dated OIS pricing has firmed across meetings following the BoJ's highly anticipated decision to hold rates steady yesterday. 

  • Prices have firmed by 2-5bps compared to Wednesday’s closing levels. BoJ Governor Kazuo Ueda left the possibility of a rate hike in December open, noting that downside risks to the U.S. economy had diminished, though he highlighted new concerns linked to next week’s presidential election.
  • “If the probability of achieving our economic and inflation targets increases, it will lead to a rate hike,” Ueda stated, citing strong recent U.S. data as a reason for not needing to reiterate the bank's previous caution about taking time to monitor risks.
  • However, Ueda emphasised that the BoJ does not have a predetermined path for raising the policy interest rate from 0.25%. He underscored that policymakers will assess the need for rate hikes at each meeting based on the latest available data.
  • Currently, markets are assigning a 25% chance of a 25bp hike in December, with the probability rising to a cumulative 60% by January. A full 25bp increase is not priced in until June 2025.

 

Keep reading...Show less