News that Economic Policy Minister Yoshitaka Shindo would attend the Bank of Japan’s policy meeting had sparked market speculation about an earlier-than-expected policy change. It is rare for a minister to attend a BoJ meeting and, in the past, when the Bank made important policy decisions, senior government officials attended the meeting, so the market expected a somewhat aggressive move from the BoJ.
But it turned out that this was just a market illusion. In line with our view, the Bank of Japan unanimously decided to maintain its policy rate at -0.1% and its 10-year yield target at 0.0%, while maintaining its dovish “take action” guidance. additional monetary easing without hesitation if necessary”, which may have further disappointed some market players. But it’s too early to be disappointed. It should be noted that the BoJ’s assessment of the economy, especially its assessment of prices and private consumption, has changed and it is more important to read between the lines. In our view, the BoJ text paves the way for normalization next year. For example, the Bank said that private consumption has continued to rise moderately, the year-on-year CPI is likely to rise above 2% through fiscal 2024, core CPI inflation is likely to rise gradually, and inflation expectations have risen. moderately.