Japan equity memo: BOJ has hiked rate, focus now on FOMC meeting, will we avoid the kind of shock seen in summer 2024?

Research evidence excerpt

Japan equity memo: BOJ has hiked rate, focus now on FOMC meeting, will we avoid the kind of shock seen in summer 2024?

Global Markets ResearchJapan equity memo: BOJ has hiked rate, focus now on FOMC meeting, will

we avoid the kind of shock seen in summer 2024? 16 June 2026

EQUITY: JAPAN STRATEGY

Research Analysts

Potential future change in pace of ETF sales Macro strategy

Tomochika Kitaoka - NSC

We remove banks from top-down list of recommended sectors, add real tomochika.kitaoka@nomura.com

estate +81 3 6703 1815

Naoya Fuji - NSC

Central bank events this week: BOJ hikes rate as expected, focus now on FOMC naoya.fuji@nomura.com

As expected, the BOJ decided to hike its policy rate by 25bp at its 15–16 June Monetary Policy +81 3 6703 1245

Meeting, and it also announced that it would end tapering of JGB purchases in spring 2027.

While some board members voted against these moves, this was within the bounds of market

consensus forecasts. The materials show three factors supporting the economy, one factor

exerting downward pressure on the economy, and three inflationary pressures, which can be

read as hawkish. The BOJ also retained its policy of determining the timing and pace of rate

hikes based on its assessment of economic activity, prices, and financial conditions, and we

think this is unlikely to lead to expectations for rushed rate hikes every quarter as was seen at

end-July 2024. During the press conference, Deputy Governor Shinichi Uchida said that future

rate hikes would depend on economic activity and prices while also stressing the risk of higher

inflation, and he also noted that estimates for the neutral rate of interest were not useful in

practice because of their wide dispersion. The FOMC meeting is also taking place this week,