BoJ Finally Wakes Up and Nudges Rates Higher

BoJ delivers a rate hike and signals more to come

Highlights

• BoJ delivers a rate hike and signals more to come

• Term premium trumps inflation in Treasury yield run-up

• Ranks of the unemployed unable to land a job continue to swell

• Trump tariffs would deliver a deflationary shock to the Canadian economy

Key Takeaways

BoJ Hikes, Yen Strengthens

• The big news overnight was the +25-basis point rate hike by the BoJ to 0.5%, the highest level since 2008. Forward guidance hinted strongly at more such moves to come (while not committing to a time schedule). The economic outlook received an upgrade as well. The yen is finding its legs in a belated fashion — strengthening +0.8% to ¥154.85.