Analyst: The Bank of Japan meeting almost met hawkish expectations, boosting bets on a rate hike in December

(1) Analyst Eamonn Sheridan pointed out that this Bank of Japan meeting has met almost all the expectations of hawks: it announced that the core inflation rate has reached the 2% target, highlighted upside risks to prices, raised inflation forecasts, and saw one dissenting vote in favor of a rate hike, with no objections from dovish members. This should help support the yen, push up short-term Japanese government bond yields, and further strengthen the market's bets on a December rate hike. (2) Currently, the probability priced in by the market for a rate hike in December is about 80%. Oil prices are the key variable in this inflation forecast: the Bank of Japan assumes that the price of Dubai crude oil will fall from around $105 per barrel to $70 per barrel; if the Iran conflict causes oil prices to continue rising, it will further exacerbate upward inflation risks. (3) The Bank of Japan is accelerating ETF sales, which will bring a small amount of additional supply to the Japanese stock market starting from 2027; however, since the entire sale is expected to take 43 years, the annual impact remains limited.