Summary of Key Opinions from the Bank of Japan Monetary Policy Meeting (July 30–31)

Main Opinions at the Bank of Japan Monetary Policy Meeting (July 30–31)

“The year-on-year CPI (excluding fresh food) is expected to continue its gradual rise, though the pace remains weak and unstable, so it will take some time to reach 2 percent.”
“Under the current policy, the probability that the inflation rate will gradually rise toward 2 percent is low.”
“To sustain credibility in achieving the ‘price stability target,’ we should introduce forward guidance on the policy rate and strengthen the commitment toward achieving the target.”
“Introducing new forward guidance is extremely important to further strengthen the framework of monetary easing.”
“Regarding the fluctuation range of long-term interest rates, it is appropriate to keep in mind that after the introduction of the Yield Curve Control, the fluctuation range of interest rates can be roughly ±0.1 percent, and could move up and down about twice that.””

The content is almost unchanged from before, but the timing for achieving the 2 percent price target has been removed, and the interest rate fluctuation range for “YCC” has been changed.

Today there was no surprise in the announced content and reactions were minimal!

More noticeable was the strong reaction to the dollar-yen buy order flow!

USD/JPY 1-minute chart

The 10-year Japanese government bond yield is also stable around “0.11%.”

10-year JGB yield chart

If there are no changes in monetary policy next time, it seems the Bank of Japan’s wind-through will return to calm conditions.