Daiwa Securities: BOJ October Meeting to Focus on Rate-Hike Vote Split and Political Pressure
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According to a report from 格隆汇 on September 28, Daiwa Securities strategist Kenta Tadaide stated that the focus of the Bank of Japan's (BOJ) October meeting will extend beyond whether to raise interest rates. Key points of attention include how board members who advocate for accelerating inflation will vote, and whether the economy minister will attend the meeting. At the September meeting, board members Junro Asada and Ayano Sato opposed raising the rate to 1.25%. Tadaide noted that it is uncertain whether their votes reflected political intent, but for investors, even the perception of such influence is critically important. He added that the US-Japan interest rate differential remains a driver of yen weakness, but a self-reinforcing feedback loop is forming: further yen depreciation increases the necessity for rate hikes, while also prompting stronger verbal warnings from Japanese and US government officials against yen depreciation.
Source report
September 28 — According to Daiwa Securities strategist Kenta Tadaide, the Bank of Japan's (BOJ) October meeting will draw attention not only for a potential rate hike, but also for how board members who advocate for accelerating inflation will vote, and whether the Minister of Economic Affairs will attend.
At the September meeting, board members Ichiro Asada and Ayano Sato voted against raising interest rates to 1.25%.
"Whether their votes reflect political intent remains uncertain," Tadaide said. "But for investors, even the perception that such influence may exist is of utmost importance."
He added that the U.S.-Japan interest rate differential continues to be a factor driving yen weakness. However, a self-reinforcing feedback loop is emerging: further yen depreciation increases the necessity for rate hikes, while also prompting stronger verbal warnings from both Japanese and U.S. government officials regarding the yen's decline.
Source
格隆汇Regional
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Daiwa: BOJ October meeting to focus on rate vote and political pressure