Archive

January 24, 2025
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Japan: 25bp Rate Hike To 0.5% (Consensus 0.5%) in Jan-25

  • The BoJ raised its policy rate by 25 basis points to 0.5%, consistent with market expectations and reflecting a gradual recalibration of monetary policy as inflationary pressures stabilise near 2.5–3.0% in the medium term.
  • Persistent wage growth, yen depreciation, and improving labour market conditions underpin inflation forecasts. However, due to commodity price volatility and exchange rate sensitivity, inflation risks are tilted to the upside.
  • While financial conditions remain accommodative, future rate hikes are likely if inflation expectations and wage-price dynamics sustain alignment with the BoJ’s medium-term stability target of 2%.

December 19, 2024
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Japan: Policy Rate Held At 0.25% (Consensus 0.25%) in Dec-24

  • The BoJ kept its policy rate at 0.25%, aligning with consensus expectations. Domestic recovery and stabilising inflation reduced the need for immediate policy adjustments.
  • It forecasts inflation to stabilise near the 2% target by fiscal 2025, supported by an improving output gap and rising medium-term inflation expectations, despite external risks and commodity price fluctuations.
  • The BoJ’s review of its monetary policy emphasised flexibility in achieving sustainable inflation, with a continued focus on balancing growth-supportive measures against evolving domestic and global risks.

October 31, 2024
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Japan: Policy Rate Held At 0.25% (Consensus 0.25%) in Oct-24

  • The Bank of Japan held its policy rate at 0.25%, aligning with consensus expectations and reinforcing a supportive stance for sustained wage-price cycles.
  • Inflation is projected to stabilise around the 2% target by fiscal 2025, although risks from global economic and commodity prices could skew inflationary pressures upward.
  • Any rate increases remain conditional on external developments, particularly concerning the US economy’s impact on Japan’s inflation and currency dynamics.

September 20, 2024
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Japan Policy Rate 0.25% (consensus 0.25%) in Sep-24

  • The BOJ maintained its policy rate at 0.25%, consistent with expectations, sustaining globally accommodative financial conditions to support economic growth and wage inflation.
  • Global economic conditions, domestic inflation trends, wage-price dynamics, and exchange rate fluctuations will influence future interest rate decisions.
  • The BOJ’s current stance reflects a gradual approach to inflation management, focusing on monitoring wage growth and price stability before making significant policy adjustments.