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"The Bank of Japan on Wednesday (31 July 2024) raised its policy interest rate to around 0.25 percent and decided to slow the pace of its government bond buying to 3 trillion yen ($20 billion), in a further shift toward policy normalization as the nation battles a weakening yen. In its first increase since the symbolic end of its negative rate policy in March, the BOJ judged it appropriate to lift short-term interest rates to their highest level since 2008, from a range of zero and 0.1 percent. BOJ chief Kazuo Ueda said economic and price developments are 'on track' with their forecasts, but warned of upside risks to prices, especially due to the precipitous drop in the yen. Depending on incoming economic data, an additional interest rate hike may be possible, he added. ... 'The (headline) inflation rate has been consistently above 2 percent for an extended period. In view of further upside risks to inflation, we thought now was the right time,' Ueda told a press conference. 'I don't think the rate increase will have a serious negative impact on the economy because it's still at low levels,' he said." "The combination of a rate increase and a reduction in government bond purchases had not been ruled out but was seen by many analysts as unlikely, given the fragility of the Japanese economy, especially private consumption. ... As the BOJ embarks on quantitative tightening, a process to reduce asset holdings on its bloated balance sheet, its bond buying will be halved from the current 6 trillion yen a month by March 2026. The taper plan is estimated to lead to a 7 to 8 percent decrease in the central bank's government bond holdings, which total a whopping 600 trillion yen. 'It will still be far from a desirable size. We will determine exactly what would be the preferable level by looking at other central banks (reducing their balance sheets after monetary easing),' Ueda said. The tapering pace may change, the BOJ said, adding that it will carry out buying 'flexibly' to prevent a surge in bond yields. It will also review the purchase plan in June 2025. The latest outcome reflects the BOJ's growing confidence about the possibility of achieving its 2 percent inflation goal, accompanied by wage growth." BOJ hikes rates to 0.25% in push toward normalization amid weak yen, 𝘒𝘺𝘰𝘥𝘰 𝘕𝘦𝘸𝘴, 31 July 2024, https://lnkd.in/gwJzxYhF

Bloomberg on the outcome of the #boj Bank of Japan’s #monetarypolicy meeting. The Bank of Japan kept its policy rate unchanged Friday after its monetary policy meeting, holding its benchmark policy rate at 0%-0.1%. This is in line with expectations from economists polled by Reuters. While the move was expected, this comes after Tokyo’s April inflation came in lower than expected, with the core inflation rate at 1.6% compared to expectations of 2.2% from Reuters. The BOJ also said it will continue to conduct bond purchases. However, they dropped a reference to buying roughly the same amount of bonds as previously. No comment was made by the BOJ on the yen, which has steadily weakened since the BOJ ended its negative interest rate policy last month and abolished its yield curve control policy. The currency broke through the 156 mark against the U.S. dollar Friday after the decision, most recently trading at 156.11. Separately, the central bank also released its second-quarter outlook for Japan’s economy, raising its outlook for inflation in fiscal 2024. The BOJ now expects inflation between 2.5% and 3% for fiscal 2024, up from 2.2% to 2.5% in its January forecast. Inflation is then predicted to decelerate to “around 2%” in fiscal 2025 and 2026, the bank added. The BOJ also downgraded gross domestic product growth forecasts for fiscal 2024 to a range of 0.7% to 1%, down from January’s prediction of 1%-1.2% growth. Think of this as another small step in what the BoJ sees as a relatively long policy normalization journey. As mentioned by Mohamed El Erian, the length of this journey, both on a standalone basis and relative to the US, helps explain the weak #Yen. Source: Bloomberg, CNBC

The Bank of Japan (BOJ) is likely to debate whether to raise interest rates when it meets next week and unveil a plan to roughly halve bond purchases in coming years, sources said, signalling its resolve to steadily unwind its massive monetary stimulus. The rate decision will depend on how long the board members prefer to wait for clarity on whether consumption will recover and keep inflation stably around the bank's 2% target, said four people familiar with the BOJ's thinking. Over three-quarters of economists polled by Reuters expect the central bank to stand pat this month and possibly next move in September or October, but sources suggested the outcome of the July 30-31 meeting was considerably less certain. #Bank #of #Japan #to #debate #to #raise #interest #rates #next #week

The Bank of Japan is forecast to keep its interest rate settings unchanged Friday, with the yen’s plunge this week to a fresh 34-year low making it more likely the bank will tone down its stance on keeping policy easy. https://lnkd.in/gkZi2MqC The spotlight on Governor Kazuo Ueda will be more intense than usual as currency officials have intensified warnings to traders over the yen, and with business executives increasingly vocal about their currency concerns. Market players will scrutinize the policy statement, the quarterly economic outlook and Ueda’s remarks for hawkish signals, and for anything new on bond purchase plans. “This meeting is to examine the impact of the shift in the policy framework in March,” said Mari Iwashita, chief market economist at Daiwa Securities. “Given the weak yen and elevated oil prices, there is a chance for upside risks to intensify for inflation.” The yen fell through the key threshold of 155 to the dollar this week, the weakest level since 1990, keeping currency traders on high alert for the possibility of government intervention. Japan’s top currency officials have indicated frustration over the yen’s continued slide even after the BOJ’s first rate hike since 2007 last month.

It actually happened. TOKYO -- The Bank of Japan on Wednesday announced an interest rate increase and a bond tapering plan, in an aggressive move that signals the central bank's growing confidence in the recovery of the domestic economy and its concern about the sharply weaker yen. In a two-day policy meeting, the BOJ said it will guide an uncollateralized overnight call rate to 0.25% from between 0% and 0.1%, in the second rate rise this year following the one on March 19 when the central bank lifted a negative interest rate policy and ended equity purchases and yield curve controls. Only 26% of market players expected a rate rise, according to a survey of 181 bond investors conducted by Nikkei affiliate QUICK between July 23-25. Most investors expected a rate increase to take place either in September or October. The bank also announced a plan to taper its purchases of Japanese government bonds (JGBs). Monthly purchases will be reduced to 3 trillion yen by the first quarter of 2026 compared with the current pace of 6 trillion yen. As of March, the BOJ had accumulated 576 trillion yen-worth of JGBs, or 53% of the total outstanding debt of the Japanese government, under an aggressive 'quantitative easing' program launched in 2013. Following the tapering program, the central bank is expected to remain the biggest holder of JGBs in the coming years. https://lnkd.in/gtr3ZiAZ

Japan's Big Decision Tomorrow: Bank of Japan's Monetary Policy Announcement 🇯🇵 All eyes are on the Bank of Japan (BoJ) as they prepare to announce their monetary policy decision tomorrow at 8:30 AM IST (Jan 24). Market expectations are high, with predictions of a 0.25% rate hike 📈. But why does this matter? The last time Japan hiked rates by 0.25% after 30 years, it sent shockwaves across global markets! World markets and commodities tumbled, cryptos crashed and the Nifty plunged 5% within 2-3 days. However, things could be different this time around. Even if the BoJ raises rates, the market may not react as severely. The BoJ has been cautious in its approach and policymakers have emphasized the need for slow and cautious movement on interest rate hikes. Key Takeaways: - Monetary Policy Decision: BoJ's announcement tomorrow at 8:30 AM IST (Jan 24) - Market Expectations: 0.25% rate hike predicted - Global Implications: Potential impact on global markets, commodities and cryptocurrencies. - BoJ's Cautious Approach: Policymakers emphasize slow and cautious movement on interest rate hikes #BankOfJapan #MonetaryPolicy #InterestRateHike #GlobalMarkets #Economy #Finance #Business #Japan https://lnkd.in/gp_NXvfs