The BOJ decided to raise its policy rate by 0.25% to 1.25%. We review the 7-2 vote, movements in dollar-yen and the Nikkei 225 immediately after the announcement, and the outlook in light of the National CPI and FOMC results.
At its monetary policy meeting on 18 September, the BOJ decided to raise its policy rate by 0.25% to 1.25%. This was the first rate hike in 3 months since June, with the vote split 7-2. The announcement was released at 11:54, after which dollar-yen surged approximately 70 sen from around ¥156.16 to around ¥156.85, while the Nikkei 225 rose approximately ¥500 from around ¥64,660 to around ¥65,190. Governor Ueda's press conference is scheduled to begin at 15:30, with updates expected.
The "Results Highlights" were a 1.25% policy rate, a 7-2 vote, August core National CPI of 1.7% (below the 1.8% forecast), a 1.25% interest rate on complementary deposit facilities, and a 1.5% basic loan rate.
Immediately after the announcement, dollar-yen rose as the end of the event removed a source of uncertainty and the dissenting votes were seen as a dovish factor, while buying of export-oriented stocks prevailed, pushing the Nikkei 225 higher. Against this backdrop, attention is focused on the outlook for dollar-yen and the Nikkei 225, including the impact of growing AI-related demand and developments in the Middle East.
In summary, the September BOJ meeting delivered a 0.25% rate hike. Although the BOJ avoided explicitly indicating that it would accelerate the pace of rate increases, it signaled that it would adjust the degree of monetary accommodation as inflation approaches 2%. The focus now shifts to the content of Governor Ueda's press conference and developments in the Japan-US interest-rate differential.