MARCEL THIELIANT, Head of Asia Pacific at KITU Macro: The economic outlook report issued by the Bank of Japan has a hawkish tone. We still adhere to the view that differs from the previous market consensus, that is, the central bank will raise interest rates to 2% by the end of next year. The resolution was not unanimous because Super Hawk member Takada Hajime once again voted against it after April, advocating interest rate hikes. This is particularly interesting considering that the Bank of Japan just raised interest rates at the June meeting. However, contrary to our expectations, the Bank of Japan still believes that the risks facing economic activity are 'roughly equalized' despite another rise in crude oil prices in recent weeks. More notably, the Policy Committee made few adjustments to the inflation rate estimates after excluding fresh food and energy. The Bank of Japan still believes that the risk of inflation is biased upward. Most importantly, the central bank believes for the first time that potential inflation may rise above the 2% target, which indicates that concerns about the outlook for inflation have intensified.

MARCEL THIELIANT, Head of Asia Pacific at KITU Macro: The economic outlook report issued by the Bank of Japan has a hawkish tone. We still adhere to the view that differs from the previous market consensus, that is, the central bank will raise interest rates to 2% by the end of next year. The resolution was not unanimous because Super Hawk member Takada Hajime once again voted against it after April, advocating interest rate hikes. This is particularly interesting considering that the Bank of Japan just raised interest rates at the June meeting. However, contrary to our expectations, the Bank of Japan still believes that the risks facing economic activity are 'roughly equalized' despite another rise in crude oil prices in recent weeks. More notably, the Policy Committee made few adjustments to the inflation rate estimates after excluding fresh food and energy. The Bank of Japan still believes that the risk of inflation is biased upward. Most importantly, the central bank believes for the first time that potential inflation may rise above the 2% target, which indicates that concerns about the outlook for inflation have intensified.