Market Analysis

Image Credit: Reuters

Over 90% of market participants anticipate the Bank of Japan (BOJ) will maintain its current interest rates during this week's policy meeting, according to a survey released on Tuesday by money market brokerage Ueda Yagi Tanshi.  

The survey, conducted between December 12 and 16, gathered responses from 150 banks, securities firms, insurers, and other financial institutions ahead of the BOJ’s two-day meeting concluding on Thursday. 

Among respondents, 91% expect the BOJ to keep the short-term interest rate unchanged at 0.25% this week. However, 95% predict the overnight call rate, the BOJ's key policy benchmark, will rise within three months—a significant increase from 67% in a similar survey conducted in October.  

The BOJ had exited its negative interest rate policy in March and raised the short-term rate to 0.25% in July. The central bank has indicated it could hike rates again if wage growth and inflation align with projections, reinforcing confidence that Japan can achieve its 2% inflation target sustainably.  

However, the BOJ has remained cautious about the timing of its next rate increase, leading to fluctuating market expectations between December and January.  

Sources cited by Reuters suggest the BOJ is inclined to keep rates steady in December to allow more time to assess overseas risks and evaluate next year’s wage growth prospects.  

A recent Reuters poll conducted from December 4 to 11 found most economists expect no rate change this month, marking a shift from November's poll, where a narrow majority anticipated a rate hike.

Paraphrasing text from "Reuters" all rights reserved by the original author.