BOJ meeting preview: expected to hold rates, but watch out for hawkish outlook
Investing.com-- The Bank of Japan is widely expected to keep interest rates on hold at the conclusion of a meeting this week, although an improved outlook for Japanese wages and a sharp decline in the yen may elicit hawkish signals from the central bank.at 0.1%, after hiking the rate from negative territory in March- its first rate increase since 2007. The BOJ had also largely ended its yield curve control and asset buying measures.
BOJ Governor Kazuo Ueda signaled that higher wages and inflation will eventually draw more rate hikes by the BOJ this year. But he also emphasized on the need for loose policy in the near-term, citing a fragile Japanese economy.A recent pick-up in Japanese inflation- from two-year lows- could see the BOJ hike its inflation outlook for the year. Such a scenario also appears more likely in the face of stronger wage growth this year.
Pressure on Ueda to act could also come from fears of a scenario as that seen in 2022. Ueda’s predecessor, Haruhiko Kuroda, had avoided supporting the yen- a trend that saw the currency slump to 1990 lows, which in turn attracted record levels of intervention by the Japanese government.
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