With a hold widely expected, yen and JGB moves are likely to hinge on the vote and Ueda’s guidance. Hawkish dissent from Takata or Tamura, or language pointing to the next meeting, would probably bring December pricing forward and offer the yen some support. A unanimous hold paired with cautious messaging could see hike expectations drift toward January, keeping the yen soft. Front-end JGB yields remain the most sensitive gauge of shifts in timing, and Friday’s Tokyo CPI print lands on the same day as the decision, adding to the potential for volatility.
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Earlier:
ING sees BOJ holding at 1.25%, two hikes in 2027
BOJ preview: Daiwa sees hold, but 2% inflation call could open door to December hike
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Ueda is in no rush to hike again this week, but he has made clear the BOJ is not done, with the debate now about whether the next move comes in December or January.
Summary:
The BOJ is expected to keep its policy rate at 1.25% at its October 29-30 meeting, after hiking from 1% in a 7-2 vote in September
Ueda has signalled that back-to-back hikes are not needed, but said that with underlying inflation close to 2%, the bank can no longer tolerate further increases and must stabilise it around target
The likely path is a hike to 1.50% in December or January, then 1.75% in March or April
Hawks Takata and Tamura may begin pushing for the next hike on Friday, setting up a possible move on December 17-18; dovish members Asada and Sato have dissented against recent hikes
Tokyo October CPI is forecast at 2.7% to 2.8% across the key measures, with September jobs, industrial output and retail sales also due
The Bank of Japan is expected to leave its policy rate unchanged at 1.25% at its October 29-30 meeting, with Governor Kazuo Ueda signalling there is no need for back-to-back increases but that rates will have to rise further toward a neutral level, according to Mace News.
The board raised the rate from 1% in a 7-2 vote in September. Since then, Ueda has said that oversized or consecutive hikes are typically reserved for situations where inflation is rising rapidly beyond target, and that the bank is making pre-emptive adjustments to avoid being forced into abrupt tightening later. Speaking in Bangkok on October 16, he said that with underlying inflation now close to 2%, the bank can no longer tolerate further increases and its main goal is to stabilise inflation around that level. Board member Junko Koeda also argued last week that the bank should not become overly cautious about raising rates.
Mace News sees the most likely path as a hike to 1.50% in December or January, followed by a rise to 1.75% in March or April. That would continue a faster pattern of tightening every three to four months.
The board is broadly divided into four camps. Hawks Hajime Takata and Naoki Tamura may start pushing for the next increase on Friday, setting the stage for possible action at the December 17-18 meeting. At the dovish end, Toichiro Asada and Ayano Sato have dissented against recent hikes.
On the data front, Tokyo’s October CPI is forecast to show inflation at 2.7% to 2.8% across all three key measures, partly reflecting the fading impact of local fiscal support. September jobs, industrial production and retail sales figures are also due.
Bank of Japan Governor Ueda
This article was written by Eamonn Sheridan at investinglive.com.
