BOJ announce no change to policy, as expected

The BOJ’s main policy planks remain unchanged:

short-term interest rate target -0.1%
10-year bond yield around 0%, but flexible up to 1% (in October 2023 the Bank made it even more flexible by saying the 1% bound is only a ‘reference’)

Makes no changes to forward guidance on monetary policy

—

No change to core-core inflation forecasts:

Core-core CPI fiscal 2023 median forecast at +3.8 vs +3.8% forecast in the October Outlook Report
Core-core CPI fiscal
2024 median forecast at +1.9% vs +1.9% in October
Core-core CPI fiscal
2025 median forecast at +1.9% vs +1.9% in October

But core forecasts trimmed:

GDP forecasts:

BOJ quarterly
report:

Risks to economic
activity generally balanced
Need to closely
monitor whether virtuous cycle between wages and prices will
intensify
Will continue with
QQE with YCC as long as needed
Won’t hesitate to
take additional easing steps if needed
Boj will patiently
continue with monetary easing while nimbly responding to developments
Japan’s financial
system has maintained stability on the whole

Uncertainty remains but likelihood of achieving sustained 2%
inflation continues to gradually heighten
Japan’s economy
likely to continue recovering moderately
Must be vigilant to
financial, fx market moves and their impact on japan’s economy,
prices
Inflation
expectations gradually heightening
Core consumer
inflation moving below 2.5%, partly reflecting moderate rise in
service prices
Consumption
continues to rise moderately
Inflation likely to
gradually accelerate toward boj’s target through end of projected
period in quarterly report
Japan’s output gap
improving, likely to gradually expand ahead
Medium-, long-term
inflation expectations heightening gradually
Positive cycle of
rising wages, inflation to strengthen

—

Still to come, and of even more focus, is Bank of Japan Governor Ueda’s press conference due at 0630 GMT.

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