MUFG Research reviews the October BoJ meeting,

"At today’s policy meeting the BoJ decided to leave the policy rate at 1.25% with only one dissenter. Hajime Takata voted in favour of a hike considering that that with underlying inflation having reached the price stability target, the situation had shifted to a new phase in which the Bank needs to step up the pace of policy tightening to bring the policy rate closer to the neutral rate. The main surprise in the policy statement was that the BoJ unanimously decided to sped p the pace of ETF sales. The annual pace of equity ETF sales will increase from JPY330 billion to JPY860 billion on a book-value basis from January 2027. As a share of total stock market trading value the sales will increase from 0.05% to 0.1% while the estimated period required to complete the sales of all ETF holdings will shorten from around 112 years to 43 years. It remains unclear why there was a need to suddenly increase the pace of selling," MUFG notes.

"The BoJ’s increased policy focus on the risk of an inflation overshoot was one reason why the BoJ decided to speed up the pace of rate hikes at the last policy meeting in September when they signalled that policy had entered a new phase. We expect the faster pace of tightening to continue with the BoJ delivering another quarterly hike in December," MUFG adds.