DBS Group Research economist Ma Tieying notes that the Bank of Japan (BoJ) kept its overnight call rate at 0.75% in April, with the largest dissent under Governor Ueda signalling internal pressure for further tightening. DBS highlights BoJ forecasts showing stronger inflation than growth and maintains a call for a 25bps hike to 1.00% by July, but warns support for the Japanese Yen (JPY) may be limited.

BoJ signals tightening bias despite caution

"The Bank of Japan kept the overnight call rate unchanged at 0.75% at its April 28 meeting, in a 6-3 vote."

"This marked the largest dissent against a hold decision in the past three years under Governor Ueda, pointing to rising internal pressure for further tightening."

"The BoJ’s updated macroeconomic forecasts reinforce this tilt, suggesting inflation risks outweigh growth risks."

"We maintain our forecast for the BoJ to raise rates by 25bps to 1.00% by July."

"A 25bps rate hike may provide only limited support to the JPY."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)