Bank of Japan monetary policy announcement.
- short-term interest target remains -0.1%
- 10 year JGB target remains around 0%
- Repeats April market ops guidance to offer to buy 10-year JGBs at 0.25% every business day unless it is highly likely no bids will be submitted
- Keeps guidance on policy bias, says to take more easing steps without hesitation as needed with eye on pandemic's impact on economy
- Keeps forward guidance on interest rates, says expects short- and long-term policy rates to remain at 'present or lower' levels
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Core CPI median forecast for fiscal 2022 at +2.3% vs +1.9% in April
- For fiscal 2023 at +1.4% vs +1.1% in April
- For fiscal 2024 at +1.3% vs +1.1% in April
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From the BOJ quarterly report:
- Japan's economy likely to recover as impact of pandemic, supply constraints subsides
- Must be vigilant to financial, currency market moves and their impact on japan's economy, prices
- Risks to price outlook skewed to upside for time being, roughly balanced thereafter
- Uncertainty regarding japan's economy is very high
- Japan's economy picking up as impact of pandemic subsides
- Inflation expectations are rising
- Exports rising as a trend but being affected by supply constraints
- Output is under strong downward pressure
- Consumption likely to continue increasing even as household real income comes under pressure from rising prices
- Corporate profits to remain high as a whole thanks in part to weak yen
- Exports, output likely to continue rising moderately as supply constraint eases
- Consumer inflation likely to gradually accelerate pace of increase as output gap improves, wages and medium- to long-term inflation expectations heighten
- Japan's output gap likely to turn positive around latter half of fiscal 2022
More from the quarterly report - these should give some encouragement to analysts looking for a change from the BOJ at coming meetings. Noting inflation expectations are rising.
- Wage pressure likely to gradually strengthen as job market tightens
- Medium-, long-term inflation expectations heightening moderately albeit at a slower pace than for short-term expectations
- Underlying rise in inflation likely to push up inflation expectations, lead to sustained rise in price growth
- Inflation likely to gradually accelerate toward BOJ's price target, though it will take time
The next policy statements are due from the BOJ on
- September 22
- October 28
- December 20
I wonder if we can see a change by the end of the year? The first thing likely to go is the 0.25% ceiling on 10 year JGBs.
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Coming up later is Bank of Japan Governor Kuroda's press conference, at 0600 GMT.
