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Express News | Ex-BOJ Board Member Sakurai: BOJ to Raise Interest Rates Again in Coming Months With January Emerging as Most Likely Timing
Express News | Sakurai: BOJ Will Aim at Raising Short-Term Rates Eventually to 1.5% or 2% by End of Governor Ueda's Term in Early 2028
As expected, the Bank of Japan decided to keep the policy interest rate at around 0.25%.
The Bank of Japan, at the monetary policy decision-making meeting held on the 31st, unanimously decided to keep the policy interest rate at around 0.25%. The outlook for economic and price developments lowered the consumer price core index inflation rate forecast from 2.1% in the previous fiscal year to 1.9% for 2025. The forecasts remain unchanged at 2.5% for 2024 and 1.9% for 2026. It is also pointed out that there is a greater risk of an upward revision for the 2025 price outlook. The outlook for the overall inflation rate extends to 2026.
Expectations for promoting financial normalization by the Bank of Japan have receded due to Prime Minister Ishiba's declining centripetal and cohesive force.
According to reports, in Japan's House of Representatives election (general election) held on October 27, the ruling coalition of the LDP and Komeito did not reach the majority seats considered as the key to victory. If the ruling coalition maintains the majority seats, Prime Minister Ishiba's centripetal force would have slightly increased, and there were expectations for the Bank of Japan to promote financial normalization, but the number of LDP seats decreased significantly, and such views seem to have receded. On the other hand, expectations for a soft landing of the US economy have slightly increased, and the pace of US interest rate cuts is expected to slow down.
Bank of Japan: Japanese banks should remain vigilant against market tail risks.
The Bank of Japan stated on Thursday that Japan's banks have sufficient capital bases, but need to be wary of tail risks.
Speculation of Japan's bank early additional rate cut receding is a factor for selling yen.
It is expected that in the short term, the dollar will continue to be difficult to lower due to the differences in monetary policy direction among the central banks of Japan, the United States, and China. The pace of inflation easing is slowing down, and it is expected that additional interest rate cuts will be decided at the Federal Open Market Committee (FOMC) meetings in November and December, but the total interest rate cut is likely to remain at 0.5 percentage points. On the other hand, while the Bank of Japan is maintaining its policy of financial normalization, there seems to be a growing expectation that additional interest rate hikes will come after the turn of the year. October 30-31st.
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