Bank of Japan "Summary of Opinions" from the September meeting
Following are the key takeaways from the Bank of Japan (BOJ) "Summary of Opinions" from the September meeting,
One member said the BoJ should continue raising rates if the economy and prices move in line with forecasts.
One member said there is no change to the view that Japan’s economy will slow temporarily due to U.S. tariffs.
One member argued the BoJ must support the economy by maintaining low interest rates for now.
One member suggested it might be good to consider resuming rate hikes, as more than six months have passed since the last move.
One member warned against raising rates now to avoid surprising markets.
One member said it would not be too late to await more hard data before proceeding with policy normalisation.
One member stressed the importance of assessing the impact of trade policy on the global economy, U.S. monetary policy and FX, as well as domestic prices and wages, when setting policy.
One member said waiting would provide more clarity on the U.S. outlook, but the cost of inflation pressures will gradually rise the longer action is delayed.
One member noted the economy and prices are on track with forecasts, and if no major deviations occur, policy rates should be adjusted at a regular pace.
One member said a wide range of new data will soon be available, including the impact of U.S. tariffs, first-half corporate earnings, and the Tankan survey.
One member said conditions are falling into place to resume rate hikes and adjust Japan’s still-low real interest rates, as overseas headwinds begin to recede.
One member argued rates should be pushed closer to neutral given upside risks to prices.
One member noted Japan’s economy is on a firm footing, with consumption finally picking up.
One member said the impact of U.S. tariffs on the global and U.S. economy may emerge gradually over a long period.
One member warned that if tariff-driven inflation significantly hurts the U.S. economy, Japan will not be immune.
One member said it is important to check the Tankan and corporate surveys to confirm companies are maintaining a proactive business stance.
One member said underlying inflation is gradually accelerating toward, but not yet at, the 2% target.
One member cautioned that prolonged food price increases could lift underlying inflation but also hurt consumption.
One member said Japan has already roughly achieved the BoJ’s price target and warned of upside risks as the economy remains prone to second-round effects.
One member said there is big upside risk to inflation due partly from fiscal policy impact,
Market reaction
At the time of writing, USD/JPY is defending bids above 146.50.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
추천 기사
