Published: 2025-10-30T05:31:03.000Z

BoJ Review: 7-2 Hold

6

The BoJ has kept rates unchanged at 0.5% in the Oct 30th meeting with a 7-2 vote

 

The BoJ has kept rates unchanged at 0.5% in the Oct 30th meeting with a 7-2 vote, citing short term stalling inflation and downside risk for economic growth. Despite the current inflationary dynamics are supportive and the clarity from the U.S.-Japan trade front have freed the BoJ's hand to tighten, the elephant in the room is the uncertainty in fiscal policy from the new PM Takaichi. The BoJ would not risk a head-lock with Takaichi on her first month with little risk of inflation overshooting. 

There isn't much changes in the October economics outlook, only real GDP for fiscal 2025 is revised 0.1% higher to 0.7% and ex fresh food & energy CPI for fiscal 2026 is revised 0.1% higher to 2%. The continue to see a certain level of trade uncertainty globally despite most countries had a deal with the U.S., so as geopolitical uncertainty in Middle East and Ukraine-Russia. 

The forward guidance did not change for the BoJ vowed to increase interest rate according to economic and inflationary development. We see there should be a 25bps hike in the coming meeting after they get clarity on Takaichi's policy.

4Cast Ltd. and all of its affiliates (Continuum Economics) do not conduct “investment research” as defined in the FCA Conduct of Business Sourcebook (COBS) section 12 nor do they provide “advice about securities” as defined in the Regulation of Investment Advisors by the U.S. SEC. Continuum Economics is not regulated by the SEC or by the FCA or by any other regulatory body. This research report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Nonetheless, Continuum Economics has an internal policy that prohibits “front-running” and that is designed to minimize the risk of receiving or misusing confidential or potentially material non-public information. The views and conclusions expressed here may be changed without notice. Continuum Economics, its partners and employees make no representation about the completeness or accuracy of the data, calculations, information or opinions contained in this report. This report may not be copied, redistributed or reproduced in part or whole without Continuum Economics’s express permission. Information contained in this report or relied upon in its construction may previously have been disclosed under a consulting agreement with one or more clients. The prices of securities referred to in the report may rise or fall and past performance and forecasts should not be treated as a reliable indicator of future performance or results. This report is not directed to you if Continuum Economics is barred from doing so in your jurisdiction. Nor is it an offer or solicitation to buy or sell securities or to enter into any investment transaction or use any investment service.
Analyst Declaration
I,Cephas Kin Long Yung, the FX Analyst declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.