(Reuters) -The Bank of Japan kept interest rates steady on Thursday, as policymakers preferred to tread cautiously in pushing up borrowing costs amid uncertainty over U.S. president-elect Donald Trump’s economic plans.
As widely expected, the nine-member BOJ board decided to keep its short-term policy rate unchanged at 0.25%. But hawkish board member Naoki Tamura dissented and proposed raising interest rates to 0.5% on the view inflationary risks were building. His proposal was voted down.
QUOTES:
ALVIN TAN, HEAD OF ASIA FX STRATEGY, RBC CAPITAL MARKETS, SINGAPORE
“I would’ve thought that given the Fed’s somewhat hawkish statement, you could argue that actually kind of helps the BOJ to also provide a bit more of a hawkish guidance…. but that didn’t happen.
“We still have Governor (Kajuo) Ueda’s press conference coming up. But in general, if he remains noncommittal about imminent hikes, then I think that would be unabashedly dovish.”
SHOKI OMORI, CHIEF JAPAN DESK STRATEGIST, MIZUHO SECURITIES, TOKYO
“Monetary policy has been maintained as expected.”
“Given that the economic assessment remained unchanged, the pair briefly touched 155 following the release of the statement. The issue now is the extent to which the yen will be sold against major currencies from this point forward. Should the USD/JPY pair easily surpass the Ministry of Finance’s defence lines at 158, 160, and 162, there is a possibility that the Ministry of Finance and the Bank of Japan may issue statements to curb yen depreciation. The next resistance level is likely to be around 156 yen.”
CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE
“This would have been a good window for the BOJ to hike given a hawkish Fed, but the Fed’s pause and the BOJ’s reluctance suggest that the dollar/yen may face upward pressure.
“Price-related data and labour market reports continue to support the case for BOJ to hike. The Fed turning more hawkish should also have given BOJ policymakers some comfort in raising rates today.”
BEN BENNETT, ASIA-PACIFIC INVESTMENT STRATEGIST, LEGAL AND GENERAL INVESTMENT MANAGEMENT, HONG KONG
“The decision to keep rates on hold was widely expected by investors, so I don’t expect a big market reaction. That said, the hawkish Fed dot plot overnight gave the BOJ an option to increase rates, and there was one dissenting vote for a 25-bp hike, so it looks like rates will be going up early in 2025.”
MASAHIRO ICHIKAWA, CHIEF MARKET STRATEGIST, SUMITOMO MITSUI DS ASSET MANAGEMENT, TOKYO
“The decision was in line with market expectations, but futures pared losses, which indicated a relief among investors, as the decision came right after the unexpectedly hawkish view of the U.S. Federal Reserve’s rate path for next year.”
