TD Securities said the Bank of Japan’s decision to keep its policy rate unchanged at 0.5% was fully in line with expectations, with the same two board members again dissenting in favour of a hike. The firm described the central bank’s latest economic assessment as largely unchanged from July, despite a minor upgrade to 2025 GDP and 2026 core CPI forecasts.
The yen weakened after Governor Kazuo Ueda’s press conference, where he signalled little urgency for further policy tightening in the near term. However, TD said Ueda’s remark that the BoJ could still act while the government finalises its budget suggests a December rate hike remains possible.
By the next meeting (December 18 and 19), Ueda will have fresh data on wage trends from BoJ branch managers, which TD expects will guide the bank’s next move. “We continue to see a December hike as our base case,” the firm said.
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From the October meeting, yesterday:
And:
- USD/JPY eyes upside breakout on Ueda press conference
- BOJ governor Ueda: Want to see early momentum of spring wage negotiations
- BOJ governor Ueda: We need more data in deciding to adjust degree of monetary easing
- BOJ governor Ueda: No preset ideas about timing of next rate hike
- BOJ governor Ueda: Easy monetary conditions will continue to support the economy
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ps. Japan’s Ministry of Finance will be conducting an auction of two-year notes today. The BoJ hold should give prices a solid footing.
