Interest Rate Decision:
1. Interest Rate Decision: The Bank of Japan maintained its interest rate at 1.25%, in line with expectations.
2. ETF Sales: The Bank of Japan accelerated ETF sales, increasing the annual sales volume to ¥860 billion.
3. Voting Ratio: 8-1; Takada dissented and proposed raising the short-term interest rate target to 1.5%, but this was rejected by the committee.
4. Economic Outlook: The Bank of Japan raised its core inflation forecast for next year from 2.4% to 2.6%, and its GDP forecast for this year from 0.6% to 0.7%.
5. Forward Guidance: The Bank of Japan will continue to raise interest rates based on economic and price trends and financial conditions. Anchoring the underlying inflation rate near the 2% target is crucial.
6. Inflation Situation: Unlike in the past when downside price risks needed to be monitored, Japan has entered a new phase where the risk of inflation overshooting needs to be considered; the underlying inflation rate is likely to remain within the range consistent with the central bank's target level.
7. AI Impact: If AI profits fail to expand in tandem with investment, there may be downward pressure, accompanied by changes in asset prices. We will closely monitor the Middle East conflict, the yen, and demand for artificial intelligence.
Press Conference:
1. Economic Situation: The Japanese economy is expected to continue its moderate growth, with government measures and loose monetary conditions appearing to be strongly supporting the economy.
2. Forward Guidance: The necessity of interest rate hikes will be discussed at each meeting; the Bank of Japan will continue to raise policy rates and adjust the degree of monetary easing based on developments in economic activity, prices, and the financial situation.
3. Inflation Situation: Core CPI inflation is generally in line with the 2% price stability target, but the Bank of Japan has not yet declared that it has achieved its inflation target. The Bank of Japan does not intend to formally declare that it has achieved its price target at any point in time; whether or not to declare deflation depends on the government.
