Viresh Kanabar
Himino’s Four Factors All Point to Upside Risks on Inflation and Bolster Case for Further Hikes Himino’s importance on the BoJ should not be underappreciated. I often see him as Ueda’s number two due to his closeness to the Governor’s views on many topics. Today’s speech was also important because it was the first since […]
Viresh Kanabar
Summary Since the June meeting, the data continues to point to resilient growth, rising inflation expectations, stronger energy/FX-driven price pressures and still-accommodative financial conditions. These three events have pushed Japan’s front-end pricing higher: the Summary of Opinions, Tamura’s June speech and recent reports have all pointed to greater openness to faster normalisation. Tamura matters because […]
Viresh Kanabar
Summary The BoJ hiked 25bp to 1%, as expected, with Asada dissenting but not materially shifting the Board’s broader balance. The statement and Uchida’s press conference reinforced the message: policy remains accommodative even after the move to 1%. Coupled with recent speeches, the implication is that the BoJ now appears to see 1.5% as the […]
Viresh Kanabar
Summary Ueda’s speech was hawkish, as he shifted the balance towards upside inflation risks mattering more than downside growth risks. The BoJ now sees a higher risk that the oil shock passes through into broader inflation, given Japan has exited deflation, inflation expectations are near 2%, labour markets are tight and financial conditions remain loose. […]
Viresh Kanabar
Summary Despite inflation implications, the BoJ is likely to treat the energy shock as a demand shock first and foremost. We expect the BoJ to lift its headline inflation forecast for 2026, but this is of little importance relative to Gov Tamura’s decision to hold or hike. Elsewhere, we believe loose financial conditions are leading […]
Viresh Kanabar
Summary The BoJ kept rates unchanged at 0.75% as expected. The voting was split 7-1, with Gov Takata dissenting in favour of a rate hike. We find Gov Tamura’s decision not to dissent interesting, as it suggests a hike in April may not be likely given his hawkish posture. Elsewhere, Gov Ueda was fairly hawkish […]
Viresh Kanabar
Summary The BoJ kept rates on hold as expected. The BoJ increased both its growth and inflation outlook for FY 2026 to 1% and 2.2%, respectively, suggesting another year of 3% NGDP growth. Ueda’s presser was fairly tame, with little new information. There was a bit more focus on investment than usual, as he suggested […]
Viresh Kanabar
Summary We expect the BoJ to stay on hold. The BoJ likely to raise GDP growth forecast for FY 2025 and 2026 to around 1%. As usual the presser will be most important, with messaging aiming to emphasise that: current policy stance remains loose, thus far rate hikes have had little impact on growth or […]
Viresh Kanabar
Summary We expect the BoJ to hike its policy rate by 25 bps tomorrow to 0.75% The decision to hike is supported by the Q3/Q4 Tankan surveys and the 2026 wage outlook survey, which show strong wage prospects. The consensus believes, and we agree that a hike is unlikely to support JPY as expectations for […]
Viresh Kanabar
Summary Governor Ueda’s speech greenlit a December rate hike by emphasising positive outlook for wage hikes and his statement that the BoJ will ‘consider the pros and cons of raising the policy interest rate and make decisions as appropriate’. He also noted downside risks from US tariffs haven not materialised thanks to swift trade deals […]
Viresh Kanabar
Summary Tensions between China and Japan escalated sharply following Prime Minister Takaichi’s comments that any attack on Taiwan could constitute “a situation threatening Japan’s survival’ which breaks historic norms by signalling Japan’s reaction function and could be interpreted as a legal mandate to intervene rather than just solidarity. China retaliated by curbing tourism to Japan, […]
Viresh Kanabar
Summary Japan’s economy remains robust despite tariffs uncertainty, though recent trade data suggests real exports to the US have slowed. During his last speech, Governor Himino (median member) highlighted downside inflation risks are more prevalent now, continued require monitoring. We view Governor Ueda’s discussion around the BoJ’s urgency to hike as guidance towards an October […]
Viresh Kanabar
Summary The BoJ maintained its policy rate today as expected. The BoJ still sees a sluggish growth outlook, while supply pressures stemming from higher food prices pushed 2025 inflation higher. Governor Ueda’s tone during the presser was dovish as he reiterated a US trade deal alone is insufficient to prompt a further hike. He also […]
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 […]
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