※Translated with Notion AI. (Plus version)
The Bank of Japan (BOJ) Monetary Policy Meeting and the Federal Open Market Committee (FOMC) meeting held on July 30-31 marked significant policy shifts.
Financial markets experienced large-scale position unwinding, with the USD/JPY falling from the 154 range to 146 within a week.
At its July meeting, the BOJ unveiled detailed plans to halve its monthly government bond purchases to 3 trillion yen over two years, down from the current 6 trillion yen.
It also raised the policy rate from 0–0.1% to 0.25%, a 0.15% increase.
Prior to last week, the consensus was against a July rate hike by the BOJ.
A Nikkei QUICK survey of market participants from July 23–25 found only 26% expecting a rate increase, while 74% did not.
Many thought raising rates while announcing a tapering plan would be challenging.
Moreover, with USD/JPY having already adjusted from over 160 to around 155 due to yen-buying interventions by the Ministry of Finance in July,
some believed the BOJ could afford to delay rate hikes.
However, the BOJ not only raised the policy rate but also clarified its intention to “continue” raising rates.
