Overview
- The Bank of Japan left its policy rate at 1.25% on Friday and formally judged that underlying inflation is broadly consistent with its 2% target.
- Tokyo core consumer prices rose 2.6% year on year in October, a reading policymakers cited as evidence that inflationary pressure has become more persistent.
- The policy vote was split 8-1 with board member Hajime Takata dissenting and favouring a faster rise to 1.5%, showing internal debate over the pace of tightening.
- Markets reacted by pricing a high chance of a December rate increase, two-year government bond demand stayed strong and the yen moved sharply on BOJ language.
- The bank revised up inflation forecasts and said it will accelerate annual ETF sales from January as it begins a cautious unwind of pandemic-era asset holdings, a shift that will affect borrowers, savers and markets if rates climb further.