December Decision: BoJ Signals Inflation Milestone – Commerzbank on Japanese Yen

Underlying price pressures have reached the 2% target, the Bank of Japan (BoJ) indicated. Commerzbank’s Michael Pfister reports that this hawkish signal accompanied a decision to hold rates steady following September’s increase. A December rate hike looks increasingly likely and is almost fully priced in. Further guidance from Governor Kazuo Ueda could offer modest near-term support to the Japanese Yen.

December hike draws closer as BoJ keeps rates steady

"As expected, a few hours ago the Bank of Japan left its key interest rate unchanged. Anything else would have been a major surprise, given the rate hike in September."

"Although officials have recently suggested that the pace of rate hikes could accelerate, they are unlikely to act quite so quickly. However, the BoJ did send a hawkish signal: For the first time, it was indicated that underlying price pressures had reached the 2% target."

"Nevertheless, following this indication, the further interest rate hike in December - which we had also anticipated - is likely coming closer."

"If the BoJ Governor, Kazuo Ueda, provides further clues on this matter at the press conference at 6:30 UK time, the yen could strengthen slightly once again, even though the December move is now almost fully priced in."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)