The BoJ left rates unchanged but kept its guidance that further hikes remain on the table if the economy tracks its baseline outlook—nudging focus toward a potential move as soon as December. Core forecasts were broadly intact, while the statement and presser sharpened attention on overseas risks and the growth backdrop.

Key Takeaways from Governor Ueda

• Baseline intact, confidence improving: Projections are “largely unchanged” from July, with the likelihood of the baseline “heightening somewhat.”
• Wages first, then hikes: The BoJ wants “a bit more time” to assess wage-setting into next year and confirm a wage–price tandem consistent with durable 2% inflation.
• Inflation mix: Food inflation is moderating, while underlying inflation is rising moderately. The BoJ does not see itself behind the curve, but will scrutinize whether persistent food price moves create upside/downside risks.
• External headwinds: Elevated uncertainty over trade policies and their impact on global growth and prices remains the key swing factor.

Policy Implications

• Conditional hawkish bias: The bar for a hike is tied to evidence of sustained wage momentum and sticky underlying inflation. A December move is plausible if upcoming data cooperate.
• Data dependency: Autumn wage negotiations guidance, bonus rounds, and services inflation prints are pivotal. Any softening in external demand could delay normalization.

Market Implications (tactical)

• JPY: Skews firmer on dips if markets bring forward BoJ normalization odds; path remains headline- and data-sensitive.
• JGBs: Front-end yields biased higher on hike optionality; long-end anchored by growth risk and BoJ flexibility.
• Equities: Banks/insurers benefit from a steeper path; exporters watch USD/JPY—yen strength is a headwind if normalization expectations build.

What to Watch Next

1. Wage data & corporate guidance (winter bonus indications, 2026 pay intentions).
2. Services & underlying inflation momentum into year-end.
3. Global growth pulse and trade-policy headlines—key for external demand and imported inflation.
4. BoJ communication cadence ahead of the December meeting for any recalibration of guidance.