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Bank will keep policy unchanged next week but we expect a 25bp hike in May Strong inflation and wage growth warrant more tightening; US tariffs key risk Rates will reach neutral territory of 1.5% in 2027 The Bank of Japan will keep policy settings …
12th March 2025
The Bank of Japan has signalled that it will raise rates at its January meeting. And with inflation set to remain above the Bank’s 2% target for a while yet, we’re sticking to our forecast that the policy rate will reach an above-consensus 1.25% by the …
16th January 2025
Muddied communication from BoJ makes December meeting a close call On balance, we’re sticking to our forecast of a 25bp rate hike next week With inflation overshooting BoJ’s forecasts, further tightening next year likely The outcome of the Bank’s upcoming …
12th December 2024
Strong US labour market should have soothed hard landing concerns Domestic data remain strong, but Bank has signalled that it won’t hike in October Bank will wait until December to hike again, but won’t tighten any further in 2025 The Bank of Japan …
24th October 2024
Stronger yen has reduced upside risks to inflation, but labour shortages persist Recent data should have enhanced Bank’s confidence in its central scenario Bank will hike rates in October, but refrain from tightening any further in 2025 The Bank of …
12th September 2024
Bank has pledged that it will keep tightening policy if inflation evolves as expected If anything, weak yen creates upside risks to Board’s inflation forecasts Bank will hike its policy rate by 20bp in both July and October At its upcoming meeting, we …
24th July 2024
Bank may reduce its bond purchases next week, though we think it will wait until July. Next rate hike should happen in July as BoJ increasingly worried about weaker yen. However, sharp slowdown in underlying inflation will forestall a series of rate …
6th June 2024
Bank will probably revise up its inflation forecasts at upcoming meeting Ueda sounds keen on another rate hike However, window for tightening is closing as underlying inflation set to fall below 2% Governor Ueda sounds keen in tightening policy further …
22nd April 2024
We’ll be discussing the outlook for inflation, monetary policy and the implications of higher Japanese rates for domestic and global financial markets in a 20-minute online briefing at 8am GMT/4pm SGT on 19th March . (Register here .) Shunto results in …
13th March 2024
While overall inflation has moderated, services inflation has accelerated Bank will wait for upcoming spring wage negotiations before adjusting policy We expect a rate hike to 0.1% in March, with Yield Curve Control ending by mid-year The Bank of …
16th January 2024
Inflation is slowing and domestic demand is weakening However, price pressures are increasingly broad-based and wage growth is accelerating Bank’s leadership signalling that end of negative rates isn’t far off The Bank of Japan is increasingly keen to …
12th December 2023
Board will revise up FY2023 inflation forecasts but signal below-target inflation in 2025 We don’t expect any tweaks to Yield Curve Control but the policy is effectively over Negative rates will end in early-2024, YCC will formally be abandoned by …
24th October 2023
The sustainability of above-target inflation is still in doubt However, Bank seems keen on getting rid of negative interest rates We now expect the Bank to lift its policy rate from -0.1% to +0.1% in January Even though the sustainability of …
18th September 2023
Bank will revise up 2023 inflation forecast Early signs that virtuous cycle between wages and prices has finally arrived However, widening of tolerance band would risk renewed bond market sell-off At the upcoming meeting, the Bank of Japan will revise …
21st July 2023
Ueda resolutely dovish despite continued strengthening of price pressures Yield Curve Control here to stay at least until conclusion of review next year Inflation set to fall sharply next year which will make it difficult to abandon YCC The Bank of …
9th June 2023
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28th April . Register here . GDP growth falling short of expectations, but price pressures increasingly broad-based …
21st April 2023
Bank under political pressure to abandon Yield Curve Control as inflation surges Incoming Governor Ueda seems to have been given a mandate to end the policy However, existing Governor Kuroda may well spring one last surprise Yield Curve Control is on …
3rd March 2023
Widening of tolerance band has done little to improve market functioning Nomination of less dovish Governor would signal Yield Curve Control is on its way out However, renewed slowdown in inflation will prevent policy rate hikes The widening of the …
11th January 2023
Consumers shedding virus-related caution and inflation surging to multi-decades highs However, global headwinds are strengthening and import prices are slowing Bank would be very brave to start tightening during a global recession Window for policy …
13th December 2022
Board will lift FY2022 inflation forecasts but signal below-target inflation further ahead High inflation is triggering larger pay hikes but that won’t last Even a hawkish successor for Kuroda would struggle to tighten during a global recession The …
20th October 2022
Deadline for applications under COVID-19 lending facility won’t be extended Interest rate targets will remain at current levels as surge in inflation won’t be sustained Bank will be able to ride out renewed pressure on 10-year yield target The Bank …
15th September 2022
Board will lift FY2022 inflation forecast but predict below-target inflation thereafter Interest rate targets will remain unchanged for years However, calm in bond markets provides window for tolerance band widening The Bank of Japan will signal prolonged …
14th July 2022
Inflation to stay above 2% until early next year But BoJ needs broader price increases sustained by stronger wage growth Yield Curve Control looking a lot more secure, but may still be tweaked While Japanese inflation will stay just above the Bank of …
10th June 2022
Inflation will hit the Bank’s 2% target this month But BoJ won’t tighten due to stuttering recovery & weak domestic price pressures And Governor Kuroda won’t sacrifice Yield Curve Control for a stronger yen Despite coming under significant pressure in …
21st April 2022
War in Ukraine will lift inflation above 2% But Bank has made clear it will look through transitory, cost-push inflation Kishida will probably appoint a continuity candidate to replace Kuroda While the war in Ukraine will lift Japanese inflation to the …
10th March 2022
Omicron supply chain disruption won’t lift consumer inflation much Balance sheet to shrink gradually, but that won’t cause tighter monetary conditions Bank still views weaker yen as positive and won’t respond with tightening While Omicron is likely to …
12th January 2022
Emergency lending facility and corporate debt buying scheme to be extended Risks to inflation posed by worst-case Omicron scenario balanced Upside inflation surprise wouldn’t cause Bank to lose control of the yield curve While renewed virus restrictions …
9th December 2021
New PM Kishida won’t touch yield curve control Weaker yen unlikely to faze Governor Kuroda Near term growth forecasts to be revised down on supply shortages Sitting comfortably with continuity candidate PM Kishida in charge, the Bank of Japan won’t alter …
21st October 2021
LDP leadership favourite Kono Taro may set his sights on shrinking BoJ balance sheet Next PM likely to be involved in choosing Governor Kuroda’s successor Both short- and long-term policy rates won’t be touched any time soon Dug in for an extended hold, …
16th September 2021
Security holdings may edge down as JGB purchases are tapered further Near term inflation forecasts to be revised up Climate change funds likely to be interest-free but impact will be small At its July meeting we expect the Bank of Japan to outline that it …
9th July 2021
Application deadline for emergency lending facility to be extended to end of year Security holdings set to remain flat as shrinking TB holdings offset rising JGB holdings Bank may only purchase ETFs when stock market falls sharply At its June meeting we …
11th June 2021
Tolerance band around 10-year yield target unlikely to be widened any further Bank has started to reduce its JGB purchases ETF purchases will be resumed during periods of market turmoil After tweaking a range of policy measures in March, the Bank of Japan …
20th April 2021
Board acknowledges that bond market functioning has deteriorated But policymakers may be worried about impact of higher yields on activity Tolerance band to remain unchanged until vaccines allow activity to rebound fully The pendulum seems to have swung …
11th March 2021
No signs of stress in financial markets and policy already extremely loose Bank has already started to address side effects of aggressive easing Upcoming review still shrouded in mystery The Bank of Japan is unlikely to respond to the worsening virus …
14th January 2021
Recovery has surprised to the upside but third wave is a downside risk Bank to extend emergency lending facility New facility to support regional banks highlights discomfort with negative rates With the ongoing wave of infections in Japan the most severe …
10th December 2020
Bank set to lower GDP growth and inflation forecasts slightly Expansion in BoJ’s assets already very large by international comparison Bank is unlikely to announce additional easing The Bank of Japan may revise down its GDP growth and inflation forecasts …
21st October 2020
Bank will stay the course at upcoming meeting Likely future PM Suga has indicated that he sees scope for interest rate cuts But recent comments suggest he won’t interfere in monetary policy decisions The Bank of Japan will leave policy settings unchanged …
9th September 2020
Lending schemes still well below ceilings and appetite for bank lending has declined Strains in foreign currency funding markets subsiding Concerns about financial stability will prevent rate cuts The Bank of Japan is likely to leave policy settings …
8th July 2020
Existing lending schemes still well below ceilings But latest supplementary budget foresees additional subsidised lending Bank to secure funding for commercial lenders by further increase in lending schemes The Bank of Japan has already done a lot to …
9th June 2020
Funding strains not severe so major expansion in asset purchases not on the cards But looming slump in activity will derail efforts to reach 2% inflation Bank may also cut policy rate from -0.1% to -0.2% The Bank of Japan will probably take some …
22nd April 2020
Domestic demand slumped after sales tax hike and the recovery is being snuffed out Coronavirus outbreak is pushing the economy into recession Bank to follow other major central banks and cut policy rate from -0.1% to -0.2% The Bank of Japan has limited …
12th March 2020
Consumption hasn’t fallen too much after tax hike and labour market remains tight We still expect GDP growth to fall short of expectations this year But lingering capacity shortages will probably convince Bank to remain on hold The Bank of Japan will …
14th January 2020
Impact of sales tax hike was probably worse than Bank had anticipated But external headwinds are fading and the labour market remains very tight The Bank is unlikely to cut interest rates any further The Bank of Japan seems to have underestimated the drag …
16th December 2019
Outlook for both domestic and external demand has worsened a little But financial stability concerns still stand in the way of interest rate cuts Bank will probably focus its efforts on steepening the yield curve via its bond purchases The economic data …
24th October 2019
GDP growth has held up and the labour market remains extremely tight Leading indicators suggest that the economy has turned for the worse But concerns over financial stability still stand in the way of interest rate cuts There are mounting signs that the …
12th September 2019
Inflation remains well below target so Bank will pledge to keep rates low for longer Domestic demand set to slow after tax hike and external demand to soften But concerns about financial stability should forestall additional easing We expect the Bank of …
23rd July 2019
