MUFG analysts expect the Bank of Japan (BoJ) to raise its policy rate by 25 basis points (bps), either at a meeting today or in January.
They project that the BoJ will implement two more increases in 2025, bringing rates to 1.00%, aligning with the lower end of the neutral rate range.
The Spring 2025 “Shunto” wage negotiations are expected to play a key role, providing the necessary justification for the BoJ to continue monetary tightening as Japan's economic situation improves.
MUFG also expects a reduction in US-Japan yields and increased volatility in global markets to contribute to a stronger yen in the coming months, underscoring Japan's move towards a more balanced monetary policy.
This outlook highlights the BoJ's growing focus on addressing inflationary pressures and labor market dynamics while navigating a delicate policy adjustment process.
Most expect the Bank of Japan to hold steady today:
- BOJ reportedly sees little cost in waiting for the next rate hike
- BOJ was reportedly erring towards keeping interest rates unchanged
- BOJ is reportedly considering a jump rate hike
- BOJ to raise interest rate to at least 0.50% by end of March, 51 of 52 economists say
- Goldman Sachs expects the Bank of Japan to hold steady at 0.25% at a December meeting
This article was written by Eamonn Sheridan at www.forexlive.com.
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