As expected, the Bank of Japan (BOJ) reiterated that it would keep interest rates extremely low “for an extended period,” holding to forward guidance it first introduced in July. In the latest policy meeting, the BOJ maintained its short-term interest rate target at minus 0.1% and a pledge to guide 10-year government bond yields around zero percent.

Although we believe the BOJ would want to possibly enter the process of normalization as soon as possible, their inability is due to the low inflation and sluggish wage growth. Thus, we expect the current monetary policy will stay throughout 2018 and much of 2019.

• In line with our expectation and market, the Bank of Japan (BOJ) reiterated that it would keep interest rates extremely low “for an extended period,” holding to forward guidance it first introduced in July. In the latest policy meeting, the BOJ maintained its short-term interest rate target at minus 0.1% and a pledge to guide 10-year government bond yields around zero percent.

• The decision on maintaining its interest rate targets was made by a 7-2 vote with board members Goushi Kataoka and Yutaka Harada dissenting. Meanwhile, BOJ maintained its optimistic view on the economy, even as escalating global trade frictions clouded the outlook.

• Although we believe the BOJ would want to possibly enter the process of normalization as soon as possible, their inability is due to the low inflation and sluggish wage growth. Thus, we expect the current monetary policy will stay throughout 2018 and much of 2019.

Source: AmInvest Research - 20 Sept 2018