BoJ kept the steady hand in September… again – UOB

Senior Economist at UOB Group Alvin Liew assesses the latest BoJ monetary policy meeting.

Key Takeaways

“The Bank of Japan (BOJ), as widely expected, decided to keep its policy measures unchanged at its Monetary Policy Meeting in September. The main policy decision was again not unanimous as the BOJ policy board member Goshi Kataoka dissented again for the same reasons as the previous meeting in July. There was a unanimous agreement on the details of BOJ’s Climate Response Financing Operations of which the outline was first published in July and given more details in September. For the economic outlook, the BOJ also kept its cautious recovery outlook but downgraded its assessment for exports and factory output which has “been affected by supply-side constraints.” There was no notable change to the inflation outlook.”

“The September MPM and Japan’s current CPI inflation trend reinforces our view that the BOJ will not be tightening anytime soon and will maintain its massive stimulus in the next few years, possibly at least until FY2023. Markets for some time have been convinced that the BOJ has reached the end of the line on normalization and will remain in a holding pattern on policy until at least April 2023 when Governor Kuroda is scheduled to leave the BOJ. Attention for the BOJ will now likely shift to dealing with the long-term climate change issues as the central bank starts operationalizing its key measures for its green strategy.”