The BOJ December meeting summary is not suggestive of any urgent pivot

Bank of Japan Summary of Opinions from the December Monetary Policy meeting. Full text.

  • One member said must
    patiently maintain monetary easing
  • One member said must confirm
    sustainable, stable achievement of price target is foreseen in order
    to end negative rate, YCC
  • One member said must
    scrutinise wage, price moves under YCC given strong upward pressure
    on prices likely stabilised
  • One member said even if next
    spring’s wage hikes are considerably higher than expected, risk that
    this will cause underlying inflation to significantly exceed 2% is
  • One member said we are not in
    situation where we would fall behind the curve in raising rates, even
    if we decided to wait after seeing wage talk outcomes next spring

I don’t want to read too much into all this ‘one member’ headline commentary. But, if I did then I’d be doubtful of any pivot from the Bank before April, perhaps even later.

USD/JPY is up a few ticks, circa 142.46 as I update, from142.35 or so just before the release.


  • One member said steps taken so
    far have lowered likelihood of distortion in yield curve, so BOJ has
    sufficient leeway to determine whether price target will be achieved
    via virtuous wage-price cycle
  • One member said while risk of
    inflation becoming too high and requiring rapid monetary tightening
    is small, cost incurred if this risk materialises would be
  • One member said timing of
    normalising monetary policy is getting closer
  • One member said BOJ should not
    miss opportunity to normalise policy to avoid risk of high prices
    damaging consumption, achievement of price target
  • One member said looking ahead
    toward future exit from current policy, BOJ must examine benefit,
    cost of YCC and negative rate policy
  • One member said close
    attention should be paid to consumption moves for time being but
    given improvement in economy, treatment of YCC, risky asset buying
    should be considered thereafter
  • One member said the BOJ’s forward
    guidance implies that it will allow some tweaks to YCC if achievement
    of price target likely to be in sight after implementing such tweaks
  • One member said it is
    important for the BOJ to continue deepening discussion on issues such as
    timing of exit from current policy, appropriate pace of rate hike
  • One member said from
    perspective of maintaining confidence in its ability to conduct
    monetary policy in exit phase, it is important for BOJ to provide
    communication on central banks’ balance sheet
  • One member said momentum towards wage hikes heightening compared with last year

Bank of Japan Governor Ueda spoke earlier this week, on 25 December:

From the day:

This article was written by Eamonn Sheridan at Source