The BOJ's main policy planks remain unchanged:

  • short-term interest rate target -0.1%
  • 10-year bond yield around 0%, but flexible up to 1% (in October 2023 the Bank made it even more flexible by saying the 1% bound is only a ‘reference’)

Makes no changes to forward guidance on monetary policy

---

No change to core-core inflation forecasts:

  • Core-core CPI fiscal 2023 median forecast at +3.8 vs +3.8% forecast in the October Outlook Report
  • Core-core CPI fiscal 2024 median forecast at +1.9% vs +1.9% in October
  • Core-core CPI fiscal 2025 median forecast at +1.9% vs +1.9% in October

But core forecasts trimmed:

  • Core CPI fiscal 2023 median forecast at +2.8% vs +2.8% in October
  • Core CPI fiscal 2024 median forecast at +2.4% vs +2.8% in October
  • Core CPI fiscal 2025 median forecast at +1.8% vs +1.7% in October

GDP forecasts:

  • FY 2023 1.8% vs. 2.0% in October
  • FY 2024 1.2% vs. 1.0% in October
  • FY 2025 1.0% vs. 1.0% in October

BOJ quarterly report:

  • Risks to economic activity generally balanced
  • Need to closely monitor whether virtuous cycle between wages and prices will intensify
  • Will continue with QQE with YCC as long as needed
  • Won't hesitate to take additional easing steps if needed
  • Boj will patiently continue with monetary easing while nimbly responding to developments
  • Japan's financial system has maintained stability on the whole
  • Uncertainty remains but likelihood of achieving sustained 2% inflation continues to gradually heighten
  • Japan's economy likely to continue recovering moderately
  • Must be vigilant to financial, fx market moves and their impact on japan's economy, prices
  • Inflation expectations gradually heightening
  • Core consumer inflation moving below 2.5%, partly reflecting moderate rise in service prices
  • Consumption continues to rise moderately
  • Inflation likely to gradually accelerate toward boj's target through end of projected period in quarterly report
  • Japan's output gap improving, likely to gradually expand ahead
  • Medium-, long-term inflation expectations heightening gradually
  • Positive cycle of rising wages, inflation to strengthen

---

Still to come, and of even more focus, is Bank of Japan Governor Ueda's press conference due at 0630 GMT.

Bank of Japan Governor Ueda 19 December 2023