At the start of September, we noted in Mission Impossible: Ueda Protocol that the BoJ faced a tough monetary policy position. Specifically, it was that “Ueda must… calibrate not just the size of the [rate] move, but the forward guidance, in a way that satisfies Washington, reassures Tokyo, and remains credible against an inflation backdrop that is still below the 2% target on a sustained basis.”
Fast forward to today, and rumours are circulating that BoJ officials are pushing back the potential for an October 30 hike (which would be back-to-back moves).
This aligns with our view from last month that the Yen outlook is murky. However, several catalysts will likely dictate the BoJ’s actions over the next six months and have a knock-on impact on USD/JPY.