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BoJ and RBA set for key rate-signal updates next week
Markets are watching whether the BoJ’s Summary of Opinions adds support for further tightening, while the RBA is expected to hold its cash rate at 4.35% with its Statement on Monetary Policy update.
Forexlive previews a busy week for central-bank and macro catalysts, with traders focused first on the Bank of Japan’s release of the Summary of Opinions from its July 31 meeting. The BoJ kept rates unchanged at 1.00% in an 8 to 1 vote, and attention will center on how strongly other board members support additional near-term tightening, following a dissent from Takata who argued for a 25 basis point hike.
The Summary will also be scrutinized for guidance on the inflation outlook and the conditions that would support another rate hike, particularly given the BoJ’s stance that it will continue raising rates in response to economic and price developments and financial conditions. Forexlive notes that Governor Ueda highlighted risks of inflation overshooting by more than in the past and said the BoJ does not need to wait until inflation has fully stabilized at 2% before making policy decisions, with additional attention on potential spillovers from Middle East developments.
Forexlive also flags the Reserve Bank of Australia for next week, where markets are pricing roughly a 99% probability the RBA will keep the Cash Rate unchanged at 4.35%. The central bank will accompany the decision with its quarterly Statement on Monetary Policy, including updated economic projections, after the RBA paused in June despite earlier consecutive rate hikes, while maintaining hawkish language about the possibility of further increases if needed due to persistent inflation and oil supply disruptions.