Market Participants Anticipate BOJ's Steady Rates

In a recent survey conducted by Ueda Yagi Tanshi, over 90% of market participants predicted that the Bank of Japan (BOJ) will maintain its interest rates at the upcoming policy meeting. The survey, which targeted 150 financial institutions, was carried out from December 12 to 16, just before the central bank's two-day meeting concluding on Thursday.

Current and Future Interest Rate Expectations

A significant 91% of respondents believe the BOJ will keep short-term interest rates unchanged at 0.25% this week. However, a striking 95% anticipate a rise in the overnight call rate within three months, a notable increase from the 67% recorded in October's survey.

BOJ's Policy and Future Hikes

The BOJ ended negative interest rates in March and raised its short-term policy target to 0.25% in July. The central bank has signaled its readiness to hike rates again if wages and prices align with projected increases, reinforcing the belief that Japan will sustain its 2% inflation target.

Market Fluctuations and Policymaker Considerations

The timing of the next rate hike remains uncertain, causing market expectations to oscillate between December and January. Sources indicate that the BOJ is inclined to maintain steady rates in December, prioritizing the assessment of overseas risks and insights into next year's wage trends.

Economists' Predictions

A majority of economists polled by Reuters anticipate the BOJ to hold interest rates steady this month, differing from November's survey that suggested a slight majority expected an interest rate hike.