Analyst Eamonn Sheridan said the BANK OF JAPAN meeting largely fulfilled hawks'
expectations: the bank said underlying inflation has reached its 2% target,
flagged upside price risks, raised inflation forecasts and recorded one
dissenting vote supporting a rate hike with no dovish opposition. That should
support the yen, push up short-term JGB yields and cement market-implied odds of
a December rate hike at about 80%. Oil is the key variable in the projections:
the bank assumes Dubai crude will fall from roughly $105/bbl to $70/bbl, so a
sustained Iran-related oil rally would increase upside inflation risk. The bank
will accelerate ETF sales, adding modest supply to Japanese equities from 2027,
but full disposal would take 43 years so annual impact is limited.
