The BOJ's main policy planks remain unchanged:
- short-term interest rate target -0.1%
- 10-year bond yield around 0%, but flexible up to 1% (in October 2023 the Bank made it even more flexible by saying the 1% bound is only a ‘reference’)
Makes no changes to forward guidance on monetary policy
---
No change to core-core inflation forecasts:
- Core-core CPI fiscal 2023 median forecast at +3.8 vs +3.8% forecast in the October Outlook Report
- Core-core CPI fiscal 2024 median forecast at +1.9% vs +1.9% in October
- Core-core CPI fiscal 2025 median forecast at +1.9% vs +1.9% in October
But core forecasts trimmed:
- Core CPI fiscal 2023 median forecast at +2.8% vs +2.8% in October
- Core CPI fiscal 2024 median forecast at +2.4% vs +2.8% in October
- Core CPI fiscal 2025 median forecast at +1.8% vs +1.7% in October
GDP forecasts:
- FY 2023 1.8% vs. 2.0% in October
- FY 2024 1.2% vs. 1.0% in October
- FY 2025 1.0% vs. 1.0% in October
BOJ quarterly report:
- Risks to economic activity generally balanced
- Need to closely monitor whether virtuous cycle between wages and prices will intensify
- Will continue with QQE with YCC as long as needed
- Won't hesitate to take additional easing steps if needed
- Boj will patiently continue with monetary easing while nimbly responding to developments
- Japan's financial system has maintained stability on the whole
- Uncertainty remains but likelihood of achieving sustained 2% inflation continues to gradually heighten
- Japan's economy likely to continue recovering moderately
- Must be vigilant to financial, fx market moves and their impact on japan's economy, prices
- Inflation expectations gradually heightening
- Core consumer inflation moving below 2.5%, partly reflecting moderate rise in service prices
- Consumption continues to rise moderately
- Inflation likely to gradually accelerate toward boj's target through end of projected period in quarterly report
- Japan's output gap improving, likely to gradually expand ahead
- Medium-, long-term inflation expectations heightening gradually
- Positive cycle of rising wages, inflation to strengthen
---
Still to come, and of even more focus, is Bank of Japan Governor Ueda's press conference due at 0630 GMT.
