BoJspeak round-up: More hikes to come
Repeats with no changes
Sept 19 (Reuters) -The rhetoric from Bank of Japan officials has been consistent with the view that further rate hikes can be expected, as long as the economy evolves in line with the central bank’s outlook. Therefore, with only 25bps of tightening priced in over the next 12 months, there is room for a hawkish repricing to underpin the yen 0#BOJWATCH.
Regarding the timing of the next rate hike, the September meeting is likely to be off the table with the LDP presidential elections set for Sept. 27. This would also provide policymakers with time to digest the impact of the market turbulence and yen strength that followed the July rate hike on its economic projections. In turn, October is conceivably the next live meeting.
The neutral level for interest rates is another focal point for BoJ policy given that this is likely the destination for rates, though commentary has been rather light on this matter.
That said, the summary of opinions from the July meeting did hint that the lower bound for neutral rates may be at 1%. Meanwhile, former BoJ Governor Haruhiko Kuroda stated that rates are still a long way from neutral. This is particularly notable for the yen’s performance against currencies where central banks may look to cut rates below 1%, such as the Swiss National Bank 0#SNBWATCH.
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BoJ speakers https://tmsnrt.rs/3z2ddTK
(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
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