🏦🇯🇵Slow Wage Growth to Keep BoJ Steady: Cable FX Macro

• We can no longer say the Bank of Japan remains as the only G10 central bank to have stayed steady during this global tightening cycle. Last month, the BoJ decided to widen its yield band control with the ceiling moving to 0.50%, the adjustment saw the Japanese benchmark 10-year yield rising by about 22 basis points over the next couple of sessions

• However, even as markets test the YCC band and the expansion of the central bank balance sheet, it is still difficult to see the rise in prices filtered into further changes in BoJ policy. While headline inflation is twice the central bank's target, in a relative world this does not appear as urgent as in the EU, U.K. or Sweden, the latter overshoots the Riksbank's target by about 10 percentage points

• Another interesting story was a recently released sentiment survey by the BoJ. An estimated 53% of Japanese households report to have a worse economic livelihood than what they had a year ago, Bloomberg noted this was the highest rate in 13 years. Also, the most recent reading showed real cash earnings dropping to -3.8% vs the estimated -2.8%, the reading was the lowest since 2014

• Concluding, with signs of a potential soft demand and unwillingness to spend, and the global easing in inflation, it is difficult to view the Bank of Japan tightening policy further from an adjustment of its YCC