I posted a recap of this meeting as a bit of a preview of this. Its here:
A couple of weeks after the meeting the Bank published its ‘summary’, acknowledging it was running scared on yen gyrations:
In summary from the report:
Market Operations
- Maintained the uncollateralized overnight call rate at 0.225–0.228%.
- Reduced Japanese Government Bond (JGB) purchases to ¥4.9 trillion per month in October, down from ¥5.3 trillion in September.
- Conducted corporate bond purchases as per earlier plans.
Financial Markets
- The yen depreciated against the USD and EUR due to rising U.S. interest rates.
- Tokyo Stock Price Index (TOPIX) rose slightly, and 10-year JGB yields increased in line with U.S. rates.
- Money market rates, including the GC repo rate, were stable near 0.25%.
Global Economy
- U.S. economy grew moderately, led by private consumption despite higher interest rates.
- European economies showed signs of stabilization but remained weak in parts.
- China’s recovery slowed, pressured by the real estate sector and labor market adjustments.
- Emerging and commodity-exporting economies saw moderate improvements, driven by IT-related exports.
Japan’s Economic Conditions
- Moderate recovery with weak spots; growth expected above potential in the medium term.
- Exports and industrial production were flat but anticipated to improve with global IT demand.
- Corporate profits and business investment continued on a moderate upward trend.
- Private consumption showed resilience, supported by wage increases despite rising prices.
- Inflation remained at 2.5%, driven by rising service prices and wages. Underlying inflation expected to rise gradually.
Monetary Policy
- The policy interest rate remained at 0.25%.
- The Board emphasized a cautious approach to monetary policy amid domestic and global uncertainties.
- If inflation trends align with expectations, gradual rate hikes are possible, with a potential path to 1.0% by late fiscal 2025.
Risks and Considerations
- High uncertainties around global economic developments, commodity prices, and geopolitical tensions.
- Monitoring required for wage-price dynamics, financial market conditions, and external factors like the U.S. presidential election and interest rate trends.
Government Remarks
- The government urged continued monetary policy support to achieve stable 2% inflation.
- Emphasis was placed on wage-driven economic growth and fiscal measures to counter deflationary pressures.
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The key point is that:
- If inflation trends align with expectations, gradual rate hikes are possible, with a potential path to 1.0% by late fiscal 2025
The meeting following this October meeting was the December meeting, where rates were held steady again.
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This article was written by Eamonn Sheridan at www.forexlive.com. Source