Viresh Kanabar
Summary Governor Ueda struck a balanced tone at the BoJ press conference, highlighting both growth risks from tariffs and inflation risks from food prices and wages. The BoJ sees a low risk of falling behind the curve on inflation, with the next rate hike likely in June/July, while emphasising short/medium-term rates remain ‘deeply negative’. Wage […]
Viresh Kanabar
Summary Recent data has been mixed, preventing the BoJ taking a more hawkish tone than January. Food prices and wage growth have been higher than expected but may be negated by rising tariff tensions and weak consumption. We expect Ueda to strike a cautious tone as he waits for more clarity on trade tensions and […]
Viresh Kanabar
Summary Recent developments including Japan’s Q3 GDP data, the October inflation report, and Rengo’s wage demand support the BoJ’s FY 2024 outlook. The LDP announced measures to support the economy, including further cash transfers to low-income workers and raising the income tax threshold. Taken with the recent data, it poses the question: why wait for […]
Viresh Kanabar
Summary The BoJ kept its policy rate unchanged as expected, reaffirming its July forecast. During his presser, Governor Ueda distanced himself from the previous ‘time to spare’ narrative, leaving the door open for a December rate hike. We watch for further yen weakness and subsequent BoJ speeches guiding towards a December rate hike. Market Implications […]
Richard Jones
Summary In July, USD/JPY had its worst month since November last year, falling almost 7%. Before the MoF intervened on 11 July, the pair topped out intraday just below 162. Now, post-Fed and BoJ, USD/JPY lingers near its lowest level since March. Although most of the event risk for this week has passed, the US […]
Viresh Kanabar
Summary The BoJ hiked 15bp while highlighting increased upside risks to its inflation forecast. They were willing to look through weak household consumption, prioritising broadening wage gains and the risks of a weaker JPY. Governor Ueda stated monetary policy remains accommodative despite the hike and that further hikes are likely. Market Implications We think the […]
Julius Probst, PhD
Summary JPY has plummeted over the last two years despite Bank of Japan (BoJ) intervention. But fears of a Japanese currency and debt crisis are overblown: the BoJ owns about half the outstanding JGBs, while foreigners own only a fraction of Japanese debt. Japan has also one of the largest global net asset positions; a […]
Viresh Kanabar
Summary The BoJ is hoping that loose financial conditions will promote the virtuous cycle where stronger wage growth leads to sustainably higher inflation. While progress has been made on the wage front, there is limited evidence that consumption is rising, or that underlying inflation will hold around 2%. Looking ahead, the impact of the income […]
Richard Jones
Summary This week saw a torrent of central bank rate decisions, highlighted by the Bank of Japan (BoJ) ending its negative interest rate policy (NIRP). Also, the Swiss National Bank (SNB) surprised markets by cutting rates by 25bps. The US Federal Reserve (Fed) and Bank of England (BoE) kept policy steady with comparably less fanfare, […]
Ben Ford
Summary The BoJ ended NIRP, as we expected. They also ended YCC and discontinued ETF and J-REIT buying. JGB purchases will continue. Another dose of tightening requires the median CPI forecast to avoid revision lower. Meanwhile, bond-buying tapering and balance sheet reduction are coming, but the BoJ do not know whether they will come before […]
Ben Ford
Market Implications We expect the Bank of Japan (BoJ) to end negative rates in March. BoJ to End Negative Rates in March Wage news is out and Toyota are playing ball. In keeping with past practice, the company did not provide a percentage figure for the wage increase, but news outlets in Japan suggest that […]
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