BoJ on Hold in January, With No Rush for Further Hikes

In this paper, we discuss:

• The Bank of Japan’s decision to keep rates on hold at 0.75%, with no urgency to resume hikes;
• Growing confidence in growth and inflation, but real rates still very low, supporting only gradual normalisation;
• Political and fiscal uncertainty, including proposed tax cuts, complicating the policy outlook and unsettling JGB markets;
• Market reaction marked by higher short-end yields, yen volatility, and easing pressure at the long end.

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