Shoki Omori, Deutsche Securities' chief Japan fixed-income strategist, said the BOJ now judges underlying/core inflation has reached 2%, marking a shift in its policy objective from trying to raise inflation to preventing it from running hot. That alters the BOJ's reaction function and warrants market re-pricing. An 8-1 vote and a board member's push for a rate rise reinforce the change. Markets are shifting discussion from when the next hike will occur to where the policy rate will ultimately s

Shoki Omori, Deutsche Securities' chief Japan fixed-income strategist, said the BOJ now judges underlying/core inflation has reached 2%, marking a shift in its policy objective from trying to raise inflation to preventing it from running hot. That alters the BOJ's reaction function and warrants market re-pricing. An 8-1 vote and a board member's push for a rate rise reinforce the change. Markets are shifting discussion from when the next hike will occur to where the policy rate will ultimately settle.