BoJ maintains policy settings, as expected; maintains forward guidance; maintains yield target and 1.0% reference rate for 10yr JGB; decision on YCC unanimous; will not hesitate to take additional easing measures if necessary

DECISION 

• Maintains rate at -0.1%; decision unanimous.


• Maintains 10yr JGB yield target around 0%.


• Maintains 1.0% reference rate for 10yr JGB.


• YCC decision unanimous

INFLATION

• Y/Y rate of rise in CPI slower than a while ago, mainly due to the effects of pushing down energy prices.


• But CPI has been around 3% recently due to the pass-through of cost increases to consumer prices.


• Inflation expectations have risen moderately.


• The rate of rise in CPI is likely to be above 2% through fiscal 2024.


• Thereafter, the rate of rise is projected to slow down.


• Underlying CPI inflation is likely to increase gradually toward achieving the price stability target.

ECONOMY

• Economy has recovered moderately.


• Private consumption continues to rise moderately.


• Economy likely to continue recovering moderately for the time being.


• Japan's economy is projected to continue growing at a pace above the potential growth rate.


• Must scrutinize FX, market moves, and their impact on economy, prices.

Via BoJ

Reaction details (03:00)

In an immediate reaction to the lack of any changes.

• USD/JPY shot higher from 142.63 to 143.75 in four minutes.

Analysis details (03:00)

• The decision has disappointed some outside bets that the BoJ could've made some sort of policy tweak in December, instead the decision was unchanged across the board with the rate and YCC decisions unanimous. Furthermore, the BoJ has also acknowledged the recent downtick in CPI, although the latest nationwide release is due on Thursday.


• Next up, eyes will be on Governor Ueda's presser at 06:30GMT/01:30EST for any signs that ultra-loose policy may be at the start of its end.

19 Dec 2023 - 02:50- Fixed IncomeData- Source: Newswires/BoJ