BOJ meeting today will pave the way for a move in October and more in early 2024

Previews of the September Bank of Japan Monetary Policy Statement due today can be found here:

ING have some insightful comments on what is likely today. The CPI data earlier has set the scene:

  • Consumer price data for August was quite a bit stronger than early Tokyo inflation data suggested.
  • Strong entertainment price gains in particular point to private service prices coming under more upside pressures.
  • As core inflation is a better indicator of demand-side inflationary pressures, we think the BoJ will adjust its policy stance before too long, so that high inflation does not hurt growth.

And for the bank’s Statement and Ueda today:

  • Markets expect no change in the current policy settings. But markets will focus on how Governor Ueda elaborates on the recent changes in inflation dynamics and how weak currency effects could have a negative impact on the economy, which could shape BoJ policy.
  • Higher import costs mean that consumers will endure higher price pressures unless wage growth can catch up.
  • We think the BoJ may add some forward guidance to its statement so that it can pave the way for gradual normalization by 1H24. We think the BoJ is likely to bring about another policy change in October, so it is very important to establish a well-communicated path ahead of these anticipated changes.

ICYMI, the BoJ do not have a firmly scheduled time for the Statement release. 0230 to 0330 GMT (10.30 pm to 11.30 pm US Eastern time) is a reasonable expectation. Bank of Japan Governor Ueda will hold his press conference later, that is scheduled from 06030 GMT (2.30am US Eastern time).

This article was written by Eamonn Sheridan at Source