There is no surprise about interest rates and also no change in purchases
- The Bank of Japan made a decision on purchases of Japanese government bonds by a majority of 8-1.
- The head of the Bank of Japan, Nakamura, objected to the decision on purchases of Japanese government bonds, saying that the bank should decide to reduce them after reassessing developments in economic activity and prices in the forecast report for July 2024.
- The decision to reduce bond purchases allows long-term interest rates to move more freely.
- Uncertainties surrounding economic and financial developments at home remain high.
- The Japanese economy has recovered moderately, although some weakness has appeared.
- Inflation expectations rose moderately.
- Financial conditions were favorable.
- Private consumption was resilient despite the continued impact of rising prices and the continuing decline in car sales.
- He will make a decision on a specific plan to reduce bond purchases for the next two or two years at the next policy meeting.
- It is necessary to pay attention to developments in the financial and foreign exchange markets.
- Core CPI inflation is expected to rise gradually.
- Industrial production has been fairly stable as a trend.
- Industrial production continues to decline recently due to the suspension of production and shipment at some automakers.
Reports over the past week have indicated that the Bank of Japan will begin to scale back its bond purchases at today's meeting. Ueda also alluded to this in his speech here last week. This set market expectations, as the majority expected such a move to happen this week. But, unfortunately, this turned out to be another lesson for the Japanese central bank.
Things are never the same when it comes to the Bank of Japan. As a result, the USD/JPY pair rose, with the yen falling in all sectors.
The thinking here is that the Bank of Japan would have started to scale back its bond purchases before the next interest rate hike.
And if they are not ready to be bold enough to take a lightning step forward at this time, it is difficult to imagine that they will be bolder in announcing the next rate hike in July or even next September.
And there are two lessons to be learned:
The first is to treat sources ' reports with a little caution, especially when you are dealing with the Bank of Japan.
The second lesson is that we are always bored with the Bank of Japan.
