BoJ keeps policy unchanged, revises inflation outlook – UOB

Senior Economist at UOB Group Alvin Liew comments on the latest BoJ event.

Key Takeaways

“The Bank of Japan (BOJ), as widely expected, kept its policy measures unchanged at its 27/28 Oct Monetary Policy Meeting (MPM). The decision was unanimous and the BOJ kept to its preference for easing, reiterating its pledge that it ‘will not hesitate to take additional easing measures if necessary, and also it expects short- and long-term policy interest rates to remain at their present or lower levels’.”

“The revisions in the latest Oct 2022 Outlook for economic activity and prices (The Bank’s View) was unsurprising too, as there were broad expectations that the BOJ will further lift inflation forecasts and trim near term GDP. The BOJ now projects core CPI inflation (which excludes fresh food) will rise to 2.9% in FY2022 (from previous estimate of 2.3% in Jul MPM) and thereafter ease to 1.6% in FY2023 and FY2024. BOJ projections for GDP growth are for a downward trend, 2% for FY2022 to 1.9% in FY2023 to 1.5% in FY2024.”

“BOJ Outlook – The view of no change to BOJ’s ultra-loose monetary policy was further cemented during the post-MPM press conference when Governor Kuroda clearly spelt out that exit from easy policy or rate hikes are not imminent. Kuroda made his stance abundantly clear that the BOJ is not following other central banks to normalize monetary policy anytime soon. So, in the meantime, we should continue to expect the BOJ to keep its current easy monetary policy intact and maintain its massive stimulus for the rest of 2022 and 1Q 2023, at least until “the man who can’t be moved” exits the BOJ on 8 Apr 2023.”