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When the Bank of Japan's interest rate meeting was in progress, the Prime Minister's flash resignation triggered a political storm, and the economic life gate was still open!
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A person's happiness may be false, and a group of people's happiness cannot tell whether it is true or false. They squandered their youth and wished they could burn it all, and that posture was like a carnival before the end of the world.
Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: When the Bank of Japan's interest rate meeting was in progress, the Prime Minister's flash resignation triggered a political storm, and the life gate of the economy was unresolved!". Hope it will be helpful to you! The original content is as follows:
At a time when global financial markets are surging, Japan, as the world's third largest economy, every tiny move of its monetary policy touches investors' hearts. On Thursday (September 18), the time when the Bank of Japan Policy xmaccount.committee held a key meeting, an old uncertainty had just subsided, while another new storm was quietly brewing. This is not only the aftermath of trade frictions, but also a dramatic turning point in the political changes that hit the economic nerves. In July, a trade agreement signed by Tokyo and the United States in Japan once extinguished the haze of the trade prospects like a timely rain, causing the market's expectations for the Bank of Japan's interest rate hikes quickly, as if it saw the dawn of economic recovery.
However, the good times didn't last long. Earlier this month, Prime Minister Shigeru Ishiba suddenly announced his resignation, which was like a bolt from the blue, not only dispelling the optimistic expectations of interest rate hikes, but also sparking widespread concerns about political instability. People are beginning to speculate whether the newly appointed government will be more inclined toward loose monetary policy, which will make the Bank of Japan's tightening path even more rugged. Just at meetings on Thursday and Friday, Bank of Japan policymakers had to face layered challenges: In addition to the ongoing impact of tariff barriers and stubborn inflation, the ambiguity at the political level and its potential impact on the market will also become the core considerations for weighing the pros and cons. The results of this meeting not only concern the short-term trend of Japan's interest rates, but also indicate subtle changes in the economic landscape of Asia and even the global economy.
The brief dawn of the trade agreement and the brief carnival of expectation of interest rate hikes
Back in July this year, trade negotiations between Japan and the United States were finally settled, and the signing of a key agreement has dispersed the clouds of trade uncertainty that has long shrouded Tokyo. This agreement coversSeveral tariff reductions and market access provisions have directly reduced the external pressure faced by Japanese export xmaccount.companies and injected a shot in the domestic economy.
After this, a sharp rebound in market sentiment: Investors are betting that the Bank of Japan will accelerate its rate hike in response to the increasingly stable inflation environment.
The benchmark interest rate in Japan has remained at 0.5% since January, but the positive effects of this trade agreement have given people a real possibility of raising interest rates. The business xmaccount.community has also shown positive signals, capital expenditure plans are accelerating, and the atmosphere of salary increase negotiations is becoming increasingly strong, as if the entire economy is laying the red carpet for monetary tightening. However, this optimism is not a monolithic piece. It is as fragile as a piece of tissue paper, and may be broken if there is any movement.
The thunder of the Prime Minister's resignation: How to disrupt the central bank's austerity path
At the beginning of this month, Prime Minister Shigeru Ishiba's sudden resignation was like a bombshell, causing a blowout in the Japanese political arena. This decision originated from the intensification of factional struggle within the party and the amplification of differences on the direction of economic policies, which quickly ignited the market's panic about political instability.
At the beginning of Shiroshi Ishiba's arrival in power, he used steady economic reform as the banner to promote a number of pro-market measures, but his departure made people worry, where will the policy tone of the new government be tilted? In particular, if the successor prefers loose monetary policy to stimulate short-term economic growth, wouldn’t the Bank of Japan’s interest rate hike be forced to step on the brakes?
Takashi Hakoshi is such a highly anticipated potential candidate. In the last election for the leadership of the ruling party, she was once the strong rival of Shigeru Ishiba. She is known for her tough economic nationalist stance, but she also hints about her secret favor for loose policies. The emergence of this political variable has made the already xmaccount.complex economic environment worse.
BoJP policymakers must carefully consider this "political ambiguity" at the conference table - it may not only amplify market volatility, but also indirectly affect corporate investment and consumer spending through confidence channels. Sources familiar with the internal dynamics of the central bank revealed that even if the new prime minister xmaccount.comes to power, the Bank of Japan may not easily shake its determination to raise interest rates, because in the past year, the stubborn performance of inflation has become like a thorn, deeply plunging into the minds of decision makers. If the new government rashly demands a suspension of the tightening cycle, it may face a strong rebound from economic data.
The intersection of interest rate decision: There are many hidden worries behind the unchanged 0.5%
In the upcoming interest rate resolution, the market generally expects that the Bank of Japan will choose to remain calm and continue to maintain the 0.5% interest rate level.
This is not unexpected, but a rational trade-off based on multiple factors. Although the July trade agreement brought trade-level certainty, the shadow of the tariff hikes that followed cast a grey hue for the corporate sector. Policymakers are watching closely: Amid the gradual rise in tariff barriers, the active activities of Japanese xmaccount.companies - from the expansion of capital expenditure to the increase in salary increaseUp – Can you still maintain momentum? If these vitality factors are sluggish due to external pressure, the window for rate hikes will be further narrowed. Although inflation is stubborn, more data is needed to prove whether its foundation is stable.
Central bank officials will not act rashly, they prefer a "waiting and watching strategy" to let economic indicators speak on their own. This prudence stems from deep memory of global supply chain disruptions and also from sensitive alertness to yen exchange rate fluctuations. In short, although this interest rate decision seems dull, it is like a key step in a chess game. If you are not careful, it may trigger a chain reaction.
The spotlight of the president's speech: Careful statements may extinguish the flames of interest rate hikes
Investors' eyes will be firmly locked in the press conference on Friday afternoon. Every word by Bank of Japan Governor Ueda Kazuo may become a weather vane for the market.
Analysts at Morgan Stanley MUFG Securities predict that Kazuo Ueda will continue his usual cautious approach to avoid any statement that may be interpreted as a hint of a rate hike in October. He may stress how uncertainty in U.S. trade policy is surging like an undercurrent, quietly eroding the resilience of Japan's economy. If the president repeatedly mentions these external risks in his speech, the market is likely to turn pessimistic in an instant, xmaccount.completely rule out the possibility of a recent interest rate hike.
It is worth mentioning that the Nikkei index has recently hit new highs, largely due to the promotion of interest rate hike expectations - if this expectation is shattered, a pullback in the stock market will be inevitable. Ueda Kazuo’s statement is not only a technical policy guidance, but also a psychological market xmaccount.comfort. He knew very well that a word of careless optimism may lead to bubbles; an word of excessive conservatism will aggravate the pressure on the depreciation of the yen. This press conference will be the biggest suspense of the conference.
The next fog: Economic pulsation emerges from the experts' differences
Looking forward, the timing of the Bank of Japan's next move remains the focus of debate among observers.
Masahiro Ichikawa, strategist at Sumitomo Mitsui DS Asset Management xmaccount.company, holds a relatively conservative view, and he expects the central bank to maintain its policy unchanged until at least January next year. During this period, policy makers will carefully examine a range of economic indicators, including GDP growth, unemployment fluctuations, and the heat of next year's salary increase season. The tightening cycle will restart only when these signals are green.
In contrast, Yusuke Matsuo, an economist at Mizuho Securities, is more optimistic, pointing out that if the short-term corporate survey to be released next month and the regional reports of the governors of the Bank of Japan branch confirmed that wages and prices will grow healthily, the probability of interest rate hikes in October would increase significantly.
This difference reflects the delicate balance of the current Japanese economy: on the one hand, the protracted war of inflation makes austerity imperative; on the other hand, the dual uncertainty of politics and trade binds the hands and feet of the central bank like a curse.
Summary
To sum up, the Bank of Japan's meeting is like a high-risk balance performance: when the residual heat of the trade agreement has not yet dissipated,The political storm of the Prime Minister's resignation has xmaccount.come, and tariffs, inflation and policies are vaguely intertwined, making the road to interest rate hikes full of thorns. No matter how interest rates are finally set, Ueda and Oka's speech will become the touchstone of the market, and the differences between experts remind us that the road to recovery of Japan's economy is doomed to be tortuous.
Overall, political instability and trade uncertainty are negative for the yen in the short term, and it is expected that the yen may depreciate slightly against the US dollar in the next few weeks unless the central bank releases a clear signal of interest rate hikes or economic data is improving beyond expectations. During the Asian and European session on Thursday (September 18), the US dollar index continued its overnight rebound trend, once rising 0.4% to 147.53. Investors need to pay close attention to Friday's press conference and the results of a short-term survey in October to judge the mid-term trend of the yen.
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