00:00The Bank of Japan lifting rates as expected were at one and a quarter percent now so no surprise
00:04there but perhaps what was the surprise a couple of descents in that decision a 7-2 decision not
00:10unanimous off the back of that we've seen the yen soften somewhat 156.66 now but the BOJ also saying
00:17it does see CPI accelerating above two percent in the second half of fiscal year 2026. Let's get a
00:25little bit more on the context of this decision get over to Asia Trade co-anchor Sherry Ahn joining
00:29us live from the BOJ headquarters in Tokyo so Sherry a rate increase as expected but at the same time
00:35not quite as expected. Yeah the 7-2 descent it was really big and shocking Paul because we are now
00:45seeing that two board members appointed by Prime Minister Takaiichi, Asada and Sato dissented they
00:51actually wanted to not have to hike rates now we're at levels of one and a quarter percent that we
00:58haven't seen in decades. Now BOJ saying that member Sato said the prices are not accelerating
01:04like before while Asada said that they cannot say that the economy is strong enough with CPI
01:10below two percent. Still the BOJ kept the wording the financial conditions will remain accommodative.
01:19They see upward pressure started to spill into consumer prices medium to long-term inflation
01:24expectations are seen rising and that there's a risk that inflation could deviate above the price
01:30target. Still we have two other BOJ board members Takata Tamura who are seen as more hawkish than the
01:36rest as opposing the price outlook description this time around with this rate hike. Japan's economy has
01:44developed in line with the BOJ's view is what the central bank thinks although of course there are still
01:49risks to the baseline including the Middle East and AI demand. We have seen this morning August
01:55inflation numbers slowing for the first time in four months and we're continuing to see right now
02:01the reaction from the markets as we had seen this almost priced in for this rate hike as you said
02:06Paul
02:07very much expected but what wasn't expected was perhaps that this descent of two board members might be
02:13seen as more dovish and perhaps even a pushback from the government as well with these government
02:19Takaichi appointees and what that means for the future path of the BOJ. Now we're seeing the yen
02:26falling. Let's get some more market reaction now get over to Bloomberg's Avril Hong in Singapore. So
02:31Avril we saw that big move in the yen just now the Nikkei holding on to gains can you unpack
02:36some of the price
02:37movement we're seeing? Yeah absolutely Paul I mean you're seeing how the yen coming into today was
02:45already sort of on the back foot and bias towards weakness I mean even though we have that widely
02:50expected one to five percent from the BOJ now coming through you also get the sense that whatever BOJ
02:57tightening might come through by the end of the year is going to undershoot that of the Federal
03:02reserves and that is despite the expectation from Japan that these rate increases are going to be
03:09historic our colleagues have been talking about this the extent in which hawkish repricing can come
03:15through is at this point still really limited especially when you consider these two holdouts
03:21on the BOJ decision today along with the inflation data that we got earlier this morning now flip the
03:27board you talk about the Nikkei we have been seeing in the green today it's more less holding on to
03:32those
03:32earlier gains and this is following on from the FOMC and investors now really focusing on AI
03:38fundamentals we have of course been seeing the likes of SoftBank the chip stocks have been in the green
03:44given these positive sound bites so think about AI and the impact on the Japanese economy as well but
03:50the flip side of that is the pressure we've been seeing on Japan banks indeed for this week will we
03:56see even more of that because now there seems to be even less confidence that the BOJ will deliver to
04:04help to back up this massive rally we've already been seeing in the Japanese banks to the extent that
04:11they have been outpacing for recent times the US chip stocks were you surprised by those two dissents
04:20thank you for having me today Paul well indeed it's a slightly dovish outturn even though Bank of Japan
04:27did deliver that 25 basis point rate hike as you mentioned the two dissents and notably I think they
04:33are recently appointed by the Takaichi administration are still hesitating or somewhat cautious about the
04:40inflationary momentum that's building on within the economy so overall I think market should view this as a
04:47slightly dovish board that we are seeing right now and the focus is really on what Governor Oeda has
04:54to say later today yeah that's going to be even more interesting than perhaps it was before we got
05:01those two dissents how hard is it going to be to persuade markets that you know the door is still
05:08open to
05:08potentially another rate hike this year
05:12well I think it shouldn't be too difficult for BOJ to communicate that the pathway for policy
05:19normalization is not done yet what we do also expect the BOJ to deliver a few more hikes before we
05:27talk about neutral and terminal rates so we are still on the trajectory of policy normalization
05:32it's very critical though for us to hear from what Governor Oeda has to say about how the re-anchoring
05:39and the
05:40process of re-anchoring of inflation expectation has been panned out over the past few quarters
05:45we did see supply-side cost push inflation playing a role in accelerating the
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