Recapping the Bank of Japan monetary policy decision today - rates unchanged again ...Middle East

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Recapping the Bank of Japan monetary policy decision today - rates unchanged again

s from earlier are here:

Bank of Japan leaves rates unchanged, as expectedBank of Japan comprehensive review on past monetary easing stepsUSD/JPY jumps above 155.20 after BoJ votes 8 - 1 to leave rates unchanged again

But if you want a quickie rundown:

    Interest Rates Held Steady: The BOJ kept its short-term policy rate unchanged at 0.25%, with an 8-1 vote among its board members.

    Dissenting Vote: Board member Naoki Tamura, a policy hawk, proposed raising rates to 0.5%, citing rising inflationary risks. His proposal was voted down.

    Future Rate Hikes Expected: Markets anticipate the BOJ will raise rates early in 2025, with most expecting a hike to 0.5% by March.

    Economic Conditions:

    Japan’s economy is recovering moderately, with some weaknesses.Consumption is increasing, but uncertainty around U.S. policies and slowing demand in China could weigh on growth.Annualized GDP growth slowed to 1.2% in Q3, with consumption rising a modest 0.7%.

    Inflation Trends:

    Core inflation has fallen from a peak of 4.2% in January 2023 to 2.3% in October.Wage growth, currently at 2.5%-3%, is expected to continue amid labor shortages, supporting the BOJ’s gradual rate hike strategy.

    Market Reaction:

    The yen initially fell to a one-month low against the dollar before recovering slightly.Investors are watching BOJ Governor Kazuo Ueda’s press conference for clues on the timing of the next rate hike.

    Background:

    The BOJ ended negative interest rates in March 2024 and raised its policy target to 0.25% in July.Future hikes depend on wage growth and inflation aligning with the BOJ’s projections.

    ***

    Next up we will have the press conference from Bank of Japan Governor Ueda. This is due at 0630 GMT (0130 US Eastern time) and I expect Ueda to sound a hawkish note or two.

    USD/JPY up

    This article was written by Eamonn Sheridan at www.forexlive.com.

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