Attention is focused on the news that Prime Minister Takaichi (高市) said, “I am not a reflationist,” and on the government’s stance regarding the Bank of Japan’s rate-hike pace. The outlook for an October rate hike and the change in the policy phase are being discussed based on an interpretation of the statement and Governor Ueda’s press conference.
The view that Prime Minister Takaichi (高市)’s remark that “I am not a reflationist,” together with the substance of Economic and Fiscal Policy Minister Jōnai (城内)’s statement that “reflationary policy is over,” has weakened the government’s view on the Bank of Japan’s rate-hike pace is gaining traction. As a result, market attention has increased regarding whether the Bank of Japan will raise rates in October. The article sets out the situation by interpreting the statement and Governor Ueda’s press conference.
At its September Monetary Policy Meeting, the Bank of Japan decided on a rate hike for the first time in 3 months and left a clear message that another hike was likely in 3 months. References to price risks were repeated, showing a stance of caution over the impact of inflation exceeding the 2% target. This again suggested that the rate-hike pace would be maintained at approximately once every 3 months.
At his press conference, Governor Ueda referred to the change in the policy phase and the conditions for a major or consecutive rate hike. The focus shifted from downside risks to greater emphasis on upside price risks, and the view was expressed that the conditions for a major 0.5% rate hike or consecutive rate hikes were not currently in place. These explanations suggest an interpretation that rate hikes of approximately 0.25% will be assumed every 3 months going forward.