CNBC poll shows the Bank of Japan is expected to keep interest rates unchanged this week | Real Time Headlines

The Bank of Japan (BOJ) is likely to keep its benchmark interest rate unchanged this week, a survey showed, pending clearer domestic wage and spending trends and policy changes from the administration of U.S. President-elect Donald Trump, according to economists polled by CNBC.

A slim majority of 13 of 24 economists (54%) said the Bank of Japan is likely to keep its benchmark interest rate unchanged at 0.25% at the end of its two-day meeting on Thursday. A similar number of economists expect the Bank of Japan to raise interest rates in January. The survey was conducted between December 9 and 13.

The Bank of Japan last raised interest rates in July and has said it is ready to further tighten monetary policy if wage growth and prices are in line with its forecasts. In a recent interview with the media, Bank of Japan Governor Kazuo Ueda It is recommended to raise interest rates again “We’re getting close to the end in the sense that the economic data is on track,” but he also pointed to risks, including wage trends next year and potential changes in U.S. economic policy.

Japan’s interest rates are among the lowest in the developed world thanks to the Bank of Japan’s long-standing policy of supporting Japan’s moribund economy. The policy has kept the yen weak against most major currencies, boosting exports and tourism and spurring so-called “carry trades” in which investors borrow yen to bet on higher-yielding assets. These trends may reverse as Japanese interest rates rise and other central banks begin to lower rates.

Many economists told CNBC they believe recent data suggest Japan’s economy is broadly on track to achieve the central bank’s 2% inflation target, driven by wage growth. However, they noted that the Bank of Japan may prefer to wait another month to assess wage-driven inflation dynamics, focusing on wage negotiations next spring and the momentum of Trump’s trade and tariff policies.

Akira Otani of Goldman Sachs Japan said the Bank of Japan is not yet confident about its outlook. He pointed out that the central bank lacked sufficient clarity on whether small and medium-sized enterprises can maintain wage growth, a risk that the BOJ flagged as key to achieving its inflation target. Japanese unions typically negotiate wage increases in the first three months of the calendar year before the fiscal year begins in April.

Views that the central bank may maintain interest rates this week have also gained traction after recent media briefings suggested policymakers want more time to monitor overseas risks and gather more clues about Japan’s wage outlook.

牛津經濟研究院日本經濟主管永井茂人上週在一份報告中表示，「日本央行令人困惑的溝通」現在表明央行可能會維持利率不變，以等待春季工資談判和美國政策發展的更多information.

Japan’s normal wages grow at an annual rate of 2.5% to 3%, and the inflation rate has remained above the Bank of Japan’s 2% target for 30 consecutive months. While authorities are keen to normalize monetary policy, they are also wary of raising interest rates too quickly after more than two decades of deflation. In fact, Japan’s household spending has fallen for three consecutive months through October, while factory output has also been unstable.

Teppei Ino, head of global market research at Bank of Mitsubishi UFJ in Tokyo, also highlighted changes in market expectations resulting from media briefings. The overnight swaps market has sharply reduced bets on a rate hike in December, with a 77% chance of a rate hike as of Monday morning, well above the roughly 35% chance of no change priced in at the end of November.

“Judging from the (media) reports so far, the likelihood of delaying the rate hike appears to have increased,” Ino told CNBC on Friday.

“However, given the current trend of yen depreciation and the upcoming Federal Open Market Committee (FOMC) meeting before the Bank of Japan meeting, we should keep in mind that if USD/JPY reaches levels like 155, there is still the possibility of a sudden decision to raise interest rates ,” Ino said. said, referring to the Federal Open Market Committee meeting scheduled for this week.

The yen was trading around 154 to the dollar on Monday morning.

To be sure, some economists still expect the Bank of Japan to tighten policy this week.

Nomura Securities expects the Bank of Japan to raise policy interest rates by 25 basis points on Thursday, citing that fundamentals such as the economy and prices are on track. However, it also acknowledged that rate hikes may be delayed due to uncertainty about U.S. policy.

“We believe that if the Bank of Japan decides to pay more attention to uncertainties, including U.S. policy actions and market trends (particularly in FX markets) over Christmas, it may also decide to delay raising interest rates, as markets tend to be calm during Christmas .

The brokerage also pointed to uncertainty about the government’s fiscal support for households as a potential factor that may prompt the Bank of Japan to delay raising interest rates. Prime Minister Shigeru Ishiba’s government lacks a majority in parliament and is in talks with opposition parties over the size of a proposal to raise the minimum annual taxable entry threshold.