Sompo Institute Plus: BOJ Hawkish Stance Strengthens; Accelerated ETF Sales May Have Limited Short-Term Impact

According to Jin10, Masato Koike, a senior economist at Sompo Institute Plus, an affiliate of Nippon Life Insurance Company, said ETF sales were an unexpected move at the BOJ's meeting. The BOJ's ETF holdings still account for a relatively small share, and although the sales may affect stocks today, markets can absorb the change over the medium to long term without a major shock. Koike said the BOJ's comments that interest rates broadly matched its economic outlook, along with its higher CPI forecast, were largely in line with expectations. However, they allow the BOJ to reinforce its rate-hike bias and hawkish stance more clearly than before. With the 2% inflation target already achieved, the move could be seen as a signal that the BOJ may raise rates in December. Koike said key points to watch at BOJ Governor Kazuo Ueda's press conference are his explanation of the ETF sales and his comments on the 2% inflation target.