Bank of Japan Governor Kazuo Ueda delivered a governor’s speech on Japan’s inflation and monetary policy at the 2024 Autumn Meeting of the International Monetary Fund (IMF) and the World Bank Group in Washington, the United States, on October 23, 2024. Answers question.
Kelly Greenlee Beale | Reuters
The Bank of Japan raised interest rates by 25 basis points to 0.5% on Friday, taking its policy rate to the highest level since 2008 as it seeks to normalize monetary policy.
The move is in line with expectations from a CNBC survey from January 15 to 20, which showed The vast majority of economists predict a rate hike.
The decision was split 8-1, with board member Toyoaki Nakamura dissenting, the Bank of Japan revealed in a statement.
Nakamura said the central bank should change policy only after confirming an improvement in corporate profitability in a report released at the next monetary policy meeting.
After making this decision, yen It weakened slightly against the US dollar to 156.09, while the country’s benchmark index Nikkei 225 Index The stock index rose 0.59%.
Japan’s 10-year government bond yield rose 1.8 basis points to 1.223%.
Senior BOJ officials, including President Kazuo Ueda and Deputy Governor Ryozo Himino, have said the central bank is willing to raise interest rates.
Speaking to business leaders on January 14, Jimino said the Bank of Japan would pay close attention to the “Spring Knife” wage negotiations and hoped to see “strong wage increases” in fiscal 2025.
Vincent Chung, co-portfolio manager of T. Rowe Price’s diversified income bond strategy, said in a report on January 21 that looking forward, the rate hike will be followed by “a series of gradual rate hikes that may lead to an increase in policy rates.” It will reach 1% by the end of the year.
He added that the policy rate could even exceed 1% as that is closer to the lower end of the BOJ’s neutral rate range.
In September, Naoki Tamura, a member of the Board of Directors of the Bank of Japan represents the neutral interest rate Although the Bank of Japan has no official neutral interest rate forecast, it “will be at least around 1%.”
Chung noted that while Japanese officials say the yen is highly volatile, large-scale currency intervention similar to last year’s seems unlikely.
Last July, the yen Against the dollar, it hits its lowest level since 1986reaching 161.96. Japanese authorities It was later confirmed that they spent 5.53 trillion yenor US$36.8 billion, to support the yen exchange rate in July.
Japan Spending more than 15.32 trillion yen ($97.06 billion) to support the currency in 2024.
Inflation in the United States is likely to rise later in the quarter, which, coupled with continued economic growth, could put upward pressure on yields and potentially strengthen the dollar, weakening the yen, Watch said.
“Investors should also consider that with potential major policy shifts on trade and the Fed approaching a pause, risks to growth in both directions may be greater this year than in 2024. As a result, we expect USD/JPY realized volatility to be higher in 2024 remain at a high level throughout the year.
