The Bank of Japan is widely expected to keep rates unchanged when its meeting ends on Friday, with traders closely watching for clues about the outlook for rate hikes this year.
All 53 economists surveyed expect borrowing costs to remain unchanged at 0.25% at the end of the two-day meeting. Economists will be watching closely to see how the BOJ communicates its policy trajectory, as its messaging has drawn criticism following a rate hike in July and hawkish policy signals that are seen as helping to fuel a major sell-off in global financial markets.
In a series of recent comments, the Bank of Japan’s Monetary Policy Committee, led by Governor Kazuo Ueda, has made clear its intention to raise interest rates further if inflation progresses in line with the BOJ’s forecasts. At the same time, six of the nine board members who have spoken since the July meeting, including Governor Ueda, have stressed the need to monitor financial markets that are still viewed as volatile, and have signaled they do not plan to act this week.
Opinions have been divided among BOJ watchers since September, making the policy outlook somewhat unclear. The global monetary easing cycle is gaining momentum after the U.S. Federal Reserve finally joined most other central banks in cutting interest rates on Wednesday.
