BOJ plans to raise 25bp and end tapering

[BOJ plans to raise 25bp and end tapering]

1. Bank of Japan (BoJ) raises short-term policy rate target to 1% from 0.75%
2. BoJ votes 7 to 1 in favor of rate decision
3. Policy Committee Member 浅 Opposes Rate Decision
4. The policy rate will continue to be raised in line with the development of economic activities, prices, and financial conditions
5. BoJ halts Treasury purchases (taper) from April 2027, keeps monthly JGB purchases at around N2 trillion
6. The new money market regulation policy will take effect on June 17 (effective)
7. Evaluate the probability and associated risks of achieving baseline in determining the timing and speed of policy transformation
8. No change to plan to reduce monthly JGB purchases by N200 billion every quarter to January-March 2027
9. Asada On Middle East Situation: Bank Of Japan Needs To Respond As Downside Risks To Production And Employment Exceed Upside Risks In Prices
10. Maintains monthly JGB purchases at around N2 trillion from April 2027
11. Easing financial conditions are expected to continue even after policy rate adjustments and will continue to strongly support economic activities
12. Commissioner Takata and Tamura Oppose Explanatory Statement on Price Prospects
13. The decision to reduce government bond purchases was approved by a vote of 7 to 1
14. Japan’s economy recovered modestly, but some vulnerabilities remained
15. Ends interim inspection of strategy to reduce Treasury purchases
16. The risk of a significant slowdown appears to have eased more than before
17. Takata: CPI Growth, Including Core Inflation, Mostly Reaches Price Stabilization Target
18. Tamura: Underlying CPI Inflation Already Fits Price Stabilization Goals
19. Japan’s economy largely develops in line with baseline scenarios
20. If long-term interest rates surge, respond quickly by expanding JGB purchases and conducting operations to purchase designated prices (fixed interest rates)
21. Ready to adjust plan to reduce Treasury purchases at future policy meetings if necessary
22. The pass-through of rising oil prices is progressing relatively quickly, which could lead to a widespread rise in consumer prices
23. Tamura Proposes Quarterly N200 Billion Reduction In Treasury Purchases From April 2027
24. Tamura’s tapering proposal was rejected by a majority vote
25. Risk of underlying CPI inflation exceeding price targets
26. Japan’s financial conditions remain relaxed
27. Real interest rates are mainly negative in the short and medium term
28. JGB HOLDING BALANDS TO REDUCE BY ABOUT 36-39% IN MARCH 2030 COMPARED TO JUNE 2024
29. Japan’s economic growth will slow, but it will maintain modest expansion
30. CPI growth to significantly exceed 2% year-over-year, forecast to accelerate
31. The mechanism of a modest rise in wages and prices will persist
32. Underlying CPI Inflation Gradually Rises, Reaching Level In line with Price Targets Between Second Half Of FY2026 And FY2027
33. For the time being, the impact of future developments in the Middle East on financial and foreign exchange markets, economies, and prices should be closely watched
34. The impact of global AI-related demand and future exchange rate fluctuations on the Japanese economy and prices should be monitored
35. Operate monetary policy as necessary to achieve the 2% price target in a sustainable and stable manner