• Bank of Japan monetary policy decision and statement for October 2018

Bank of Japan keeps monetary policy steady as widely expected

  • maintains short term interest rates target at -0.1%
  • maintains 10 year JGB yield target around 0%
  • prior report
  • The full statement can be found HERE

Other headlines:

  • leaves unchanged place to buy JGBs in a flexible manner so as holdings increased at an annual pace around ¥80 trillion
  • median core CPI forecast for 2018/19 at 0.9% versus 1.1% in July
  • median core CPI forecast for 2019/20 1.4% versus 1.5% in July
  • median core CPI for 2000/21 at 1.5% versus 1.6% in July

  • median real GDP forecast for fiscal 2018/19 at 1.4% versus 1.5% in July
  • median real GDP forecast for 2019/20 and 0.8% versus 0.8% in July
  • median real GDP forecast for fiscal 2020/21 and 0.8% versus 0.8% in July
  • changes language on financial system risks and quarterly report on economy, prices

Highlights of BOJ quarterly report:

  • Japan's economy expected to continue expanding moderately
  • economies momentum for hitting price goal sustained a lacking strength
  • no sign so far of excessively bullish expectations in asset markets, financial institutions activities
  • risk of financial system destabilizing not big for now but outlook warrants attention
  • risks to price outlooks skewed to downside
  • risks to economic outlooks skewed to downside
  • inflation likely to gradually accelerate toward 2%
  • developments in overseas economies including protectionism pose risks to economic outlook
  • medium to long-term inflation expectations have been more or less unchanged
  • pace of improvement in prices, inflation expectations has remained slow compared to improvements in economy, job market
  • if confidence and fiscal sustainability declines economy may underperform baseline scenario

The USDJPY is little changed after the decision and headlnes.

The Nikkei 225 is up 332.71 points or 1.55% at 21790. The high today reached 21815.37. The price is not so far from that level (25 points) The low today is at 21530.39.

  • median real GDP forecast for fiscal 2018 2019 at 1.4% versus 1.5% projected in July