Deutsche Securities: BOJ Shift Moves Market Focus from Rate-Hike Timing to the Terminal Rate

According to Jin10, Deutsche Securities Japan fixed-income chief strategist Shoki Omori said the Bank of Japan has determined that underlying inflation has reached 2%, shifting its policy objective from bringing inflation to its target to preventing it from getting out of control. Omori said this changes the BOJ’s policy reaction function and that markets should reprice accordingly. The 8-1 vote and Hajime Takata’s position advocating a rate hike further support this view. Market discussion is shifting from when the next rate hike will occur to the level at which the policy rate will ultimately settle.