The Bank of Japan (BoJ) held the uncollateralised overnight call rate at 0.25% in an 8- 1 decision (as per our expectations). Tamura Naoki, a notable hawk on the BoJ board, voted for a rate hike to bring the benchmark rate to 0.50%. BOJ retained its headline assessment of current economic conditions. Ueda's post-MPM press conference sounded more dovish than we expected. This has led to JPY depreciating to 157.5 levels and headed towards July'24 highs of 162 odd levels. We still believe that BOJ might be able to hike in it’s 24th Jan meeting which the market is also pricing in almost 50%. A rapidly depreciating JPY adds to local inflation & by 24th Jan, BOJ will have some sense of Shunto negotiation results for 2025 as well as some clarity on new US administration policies. We believe BOJ might hike twice in CY25, once in the 24th Jan meeting & the 2nd time in the 30th Oct meeting.
