Our Impression About BoJ Deputy Gov. Uchida’s Speech

Investment Rating - The report retains a base case of the Bank of Japan (BoJ) raising rates at a measured pace, with an expected rate hike of 0.5% in January 2025 [2]. Core Insights - Deputy Governor Uchida stated that the BoJ would not raise its policy rates while financial and capital markets remained unstable, indicating a dovish stance [1][2]. - The condition for policy revision could be satisfied if financial market instability calms down, with sustained wage growth improving due to structural labor shortages [2]. - The BoJ is increasingly interested in the US economic outlook for its policy discussions, with Uchida expressing a belief in a soft landing for the US economy [2]. Summary by Sections Monetary Policy Stance - Uchida emphasized that the BoJ will not raise interest rates when financial and capital markets are unstable, which was interpreted as a dovish position [1]. - The bank's existing policy decision process remains consistent with Uchida's statements, focusing on economic activity and price projections [1][2]. Economic Outlook - Sustained wage growth is expected to improve, with strong wage hikes being reflected in actual wages [1]. - The report suggests that the US economic outlook is becoming more significant in the BoJ's policy discussions, with Uchida noting the potential for a soft landing in the US economy [2].