Japanese Yen: BoJ's Koeda reinforces tightening case – MUFG
MUFG’s Michael Wan reports that Bank of Japan (BoJ) Board Member Junko Koeda has strengthened the case for further policy tightening. Koeda emphasized upside price risks, still-accommodative financial conditions and judged the neutral rate to be well above 1%.
Bank of Japan (BoJ) Board Member Junko Koeda recently reinforced the case for further policy tightening, according to MUFG's Michael Wan. Koeda highlighted upside price risks, the still-accommodative financial conditions, and stated that the neutral rate is well above 1%. This stance aligns with a high probability of a rate change by December, as implied by swaps.
In Japan, Koeda's speech emphasized a more explicit warning against excessive caution compared to her previous remarks. While her comments suggest continued policy normalization, they do not provide a clear timeline for the next move. The Bank of Japan member's focus on upside price risks and the ongoing accommodative financial conditions supports the expectation of further rate hikes in the coming months, with the timing contingent on incoming economic and inflation data.
Overnight swaps imply an 82% probability of a rate change by December, compared to only a 4% chance in October.
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