Ueda keeps December BoJ rate hike hopes alive – TDS

The BoJ’s statement didn’t present many changes with the fireworks mainly happening during Governor Ueda’s press conference, TDS’ FX and Macro Strategist Alex Loo notes.

No Big Changes to the Statement

“Gov Ueda reverts to a policy hawk by offering more hawkish remarks today. He tried to present an open-minded BoJ Board by noting that there is no “preconception on timing of rate hike” but the punchline was his capitulation of his previous comment that the BoJ “has time to mull” on policy options.”

“We maintain our view that the BoJ could hike in Dec’24 given firmer inflation prints and the possibility of a strong wage talk discussion result (i.e., Rengo is suggesting a 5% wage raise next year).”

“While JPY can see some near-term weakness as markets digest the domestic political situation and US elections outcome, we still maintain a medium-term bullish view on the JPY. Note that JPY’s massive undervaluation (>20% on LFFV) dovetails with waning government support, and it is in the new government’s interest to stem further JPY weakness.”