The Bank of Japan (BoJ) is set to release its policy statement and Governor Kazuo Ueda will deliver a speech on Friday. The timing of the release is uncertain, but it is generally expected within the range of 0230 to 0330 GMT (22030 to 2330 US Eastern time on Thursday). Shortly after the release, Governor Ueda will speak at 0630 GMT (0230 US Eastern time).
The market is paying close attention to the statement and speech for any signals regarding a potential shift in the BoJ’s ultra-loose monetary policy. In September 2022, the BoJ intervened to support the yen after comments made by then-Governor Haruhiko Kuroda emphasized the bank’s commitment to maintaining the policy. Governor Ueda is likely to exercise caution in his remarks to mitigate the risk of triggering market volatility.
In addition to the policy statement, the BoJ is widely anticipated to maintain interest rates at their current levels and retain its guidance to continue purchasing government bonds at an approximate pace of 6 trillion yen per month. The BoJ’s projection is that inflation will remain close to its target of 2% in the coming years, based on the prospect of steady wage growth.
Former BoJ official Nobuyasu Atago remarked:
“The market is likely to react negatively if the BoJ signals a more hawkish stance than expected, as it could lead to a rise in interest rates and a stronger yen. This could hurt the economy, which is still recovering from the impact of the COVID-19 pandemic.”
Reuters also highlights political considerations:
“The BoJ is also facing pressure from the government to tighten monetary policy, as the prolonged period of low interest rates has weighed on the yen and contributed to rising import costs.”
Analysts believe that Governor Ueda may refrain from making any drastic changes in the near term, as he assesses the economic situation and gauges market reactions to his initial policy signals.
