BOJ - Bank of Japan

BOJ - Bank of Japan

28-OCT-2022


BOJ REVIEW: BoJ maintained its policy settings, as expected, with rates at -0.10% and QQE with yield curve control unchanged to target the 10yr JGB yield at around 0%, via a unanimous vote, whilst also keeping dovish forward guidance. The accompanying Quarterly Outlook Report saw Core CPI upgraded across the board, but the FY23 and FY24 forecasts remained below the BoJ's 2% target, both at 1.6% (upgraded from 1.4% and 1.3% respectively), whilst warning that the risks to prices are skewed to the upside. Real GDP growth was downgraded for FY22 and FY23, but upgraded for FY24. The BoJ said there is a need to watch FX and its impact on the economy. The central bank also said it will make changes to the way it buys ETFs from Dec 1st - the Bank will take into account the holding cost of each ETF and select those with the lowest trust fee ratio in making purchases. Separately, the BoJ upped the frequency of JGB purchases for November in its Quarterly Schedule of Outright Purchases of Japanese Government Bonds and Governor Kuroda stuck to a distinctly dovish script in the post-meeting press conference. To recap, he repeated that the Bank is not thinking about an interest rate hike or exit from easing for the time being, as CPI will undershoot the 2% target from next fiscal year onwards and cost-push inflation will ease after the new year. Moreover, Kuroda reiterated that the BoJ will not hesitate to loosen policy further, if required, it does not target FX rates and Japan has a history of suffering from Yen strength.