Nomura Research Institute said the Bank of Japan faces multiple overlapping
factors that complicate policy decisions and make clear communication critical.
The BOJ should clarify how rate increases would affect the economy relative to
past episodes and specify its tightening objectives; to date it has described
tightening as an adjustment to the degree of accommodation. If the BOJ
explicitly adopts containing upside inflation risks and re-anchoring inflation
expectations as rate‑hike goals, that would change the likely pace of hikes and
its communication approach. Whether this move strengthens market and public
confidence will largely hinge on the deputy governor’s post‑meeting press
conference.
