The Bank of Japan maintained its short-term policy target at 1.25 per cent following an 8-1 majority vote, with board member Hajime Takata dissenting. Although rates remained unchanged, policymakers revised their inflation projections upward and altered the pace of their exchange-traded fund sales. Tightening global conditions, fueled by events in France and declining U.S. equities, have provided the bank room to pause before hiking again. Market watchers expect Governor Kazuo Ueda to clarify how these international factors influence the policy path during his upcoming news conference.
Key points
Central bank officials now recognize that Japan's underlying inflation has achieved the l…: Central bank officials now recognize that Japan's underlying inflation has achieved the longstanding 2 per cent objective.
Tightening financial conditions overseas have reduced the immediate urgency for Japanese…: Tightening financial conditions overseas have reduced the immediate urgency for Japanese policymakers to push borrowing costs higher.
Analysts view the current policy hold as a temporary pause in a broader, sustained shift…: Analysts view the current policy hold as a temporary pause in a broader, sustained shift toward monetary normalization.
Sources checked by our analysis pipeline: 1
Instant View: Analysts react to BOJ decision to keep rates steady
Oct 30 : The Bank of Japan kept interest rates steady on Friday, but revised up its inflation forecast and stressed anew its readiness to continue pushing up borrowing costs to forestall mounting inflation risks.
The central bank decided to maintain its short-term policy target at 1.25 per cent by an 8-1 vote. Board member Hajime Takata dissented to the decision.
Governor Kazuo Ueda will hold a news conference at 3:30 p.m. (0630 GMT) to explain the policy decision.
COMMENTS
HIROFUMI SUZUKI, CHIEF FX STRATEGIST, SMBC, TOKYO:
"Board member Takata dissented, but this is unlikely to be a major market catalyst. The BOJ also announced a revision to the pace of its ETF sales. However, with the disposal of its ETF holdings still expected to take 43 years, the impact on financial markets is likely to be limited.
"A significant shift from its previous assessments, however, was the BOJ's recognition that underlying inflation, excluding temporary factors, had reached its 2 per cent target.
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