The BOJ unanimously decided to keep its policy rate at 1.25% and substantially increase the pace of ETF sales. The Governor said the policy phase was changing and suggested the possibility of a December rate hike. Meanwhile, attention turned to the preliminary European GDP and German CPI figures, as well as the dollar-yen trading range.
At its meeting on the 30th, the BOJ unanimously decided to keep its policy rate at 1.25% and raise the annual pace of ETF sales to approximately ¥860 billion. In its Outlook Report, it revised up its inflation forecast for the next fiscal year and reaffirmed its policy of raising the policy rate and adjusting the degree of monetary easing in response to economic, price and financial conditions.
At a press conference, Governor Ueda (植田氏) said he believed underlying inflation had reached 2% and indicated that the BOJ would seek opportunities to raise rates as the policy phase changes. He said decisions, including at the next meeting, would be made at each meeting, suggesting the possibility of an additional rate hike in December while avoiding any commitment to a specific timing.
Preliminary data showed eurozone GDP for July-September rising 0.4% quarter on quarter, above market expectations, while German GDP for the same period rose 0.2%. Germany's October CPI rose 2.8% year on year, showing slower growth, while it fell 0.1% month on month, its first decline in 4 months.
Dollar-yen fell 0.1% on a closing-price basis, declining to the upper ¥156 range before recovering. In the US, views are emerging over a December FOMC rate hike ahead of the October ISM manufacturing index, but many believe it will be difficult for dollar-yen to make a major move this week given the midterm elections and the release of employment data.