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Mar 12 - 02:55 PM

Credit Agricole: Analyzing BoJ Governor Ueda's Remarks and JPY Outlook

By eFXdata  —  Mar 12 - 01:30 PM


Credit Agricole discusses BoJ Governor Kazuo Ueda's recent comments to a parliamentary committee, highlighting his cautious stance on Japan's economic recovery, consumption weakness, and strong investment spending. Ueda emphasized the need for evidence of a virtuous cycle of higher wages and inflation before policy changes. Additionally, reports suggest that upcoming spring wage negotiations could significantly influence the BoJ's decision on ending its Negative Interest Rate Policy (NIRP), with market speculation on rate hikes shifting following these developments.

Key Points:

  1. Governor Ueda's Balanced View: Ueda noted Japan's ongoing economic recovery but pointed out areas of concern such as consumer spending.
  2. Wage Growth as a Policy Trigger: Upcoming wage negotiations are crucial, with early reports indicating substantial pay rises. The BoJ's stance on NIRP may hinge on these results.
  3. Market Reaction and Speculation: Recent news has led to fluctuating market expectations regarding a BoJ rate hike, with a slight decrease in the likelihood of a hike next week.
  4. Impact on the Japanese Yen (JPY): The changing probabilities of a BoJ rate hike have affected the JPY's performance, leading to a slight depreciation.


Credit Agricole's analysis underscores the significance of wage growth data in shaping the BoJ's monetary policy direction, particularly concerning the potential exit from NIRP. BoJ Governor Ueda's comments and the anticipation surrounding wage negotiation outcomes have influenced market expectations and the JPY's value. The upcoming wage data will be a critical determinant of the BoJ's next steps, with the market closely watching for signs of a policy shift that could impact the JPY's trajectory.

Crédit Agricole Research/Market Commentary


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