Asian stock market gains were broad, with Japanese markets leading the way and the Nikkei gaining 1.4%. This was after the BoJ announced a more dovish tone, leaving policy settings unchanged but signaling a review over the longer term of the entire framework.
The BoJ called for a “broad perspective review” of policyIt is estimated that the timeframe will be between one and two years. This was speculated, particularly after the Nikkei article hinted as such. But it was not clear it would be announced today at Governor Ueda’s first meeting. The Bank kept its policy at -0.1% and the yield target for 10-year JGBs, YCC (about 0%) with a cap of 0.5%. The 9-0 vote was unanimous. The Bank has also announced that it will no longer be providing forward guidance. The Bank said it will “patiently continue” with monetary easing. The risks for the fiscal 2023 price outlook are on the upside. However, the downside risk for 2025 is the opposite. The forecast for core CPI is 1.8% in fiscal 2023 compared to 1.6% before and 2.0% in fiscal 2020 compared to 1.8% earlier. GDP will be projected to grow at a rate of 1.4%, compared to the 1.7% prior for fiscal 202023. Fiscal 2024 is expected to see a growth of 1.2% compared to the 1.1% previously.
Ueda says BoJ won’t hesitate to add easing if needed….