The central bank is expected to keep interest rates on hold this week, awaiting clarity on domestic trends and U.S. policy under Trump, a CNBC survey finds.
A slim majority of economists — 13 out of 24 — polled by CNBC expects the Bank of Japan to stand pat after its two-day policy meeting ends on Thursday.A Japanese national flag flies while a pedestrian walks past the Bank of Japan headquarters in Tokyo, Japan, on Monday, Sept. 14, 2020.The Bank of Japan is likely to keep its benchmark interest rate unchanged this week as it awaits greater clarity on domestic wages and spending trends as well as policy changes by the incoming administration of U.
Japanese interest rates are the lowest among developed countries due to the BOJ's longstanding policy of supporting the country's moribund economy. The policy has kept the yen weak against most major currencies, boosting exports and tourism and spurring the so-called "carry trade" when investors borrow yen to bet on higher-yielding assets. These trends could reverse as Japanese interest rates rise while central banks elsewhere begin to lower rates.
"The BOJ's confusing communications" now suggests a likely outcome of the central bank leaving rates unchanged to await additional information from the spring wage negotiations and U.S. policy developments, Shigeto Nagai, head of Japan Economics at Oxford Economics, said in a note last week. "Judging from the reports so far, it seems the likelihood of a rate hike being postponed has increased," Ino told CNBC on Friday.
"We think the BOJ could also decide to put off any rate hike if it decides to place greater emphasis on uncertainties, including U.S. policy conduct and market trends during the Christmas season, when markets tend to be quiet," research analyst Kyohei Morita said in a Dec. 11 note.
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