Overview
- Sources say next week’s statement will keep a pledge to raise rates further while stressing that each move will hinge on how earlier hikes affect lending and corporate financing.
- Markets have nearly fully priced a move to 0.75% after Governor Kazuo Ueda effectively foreshadowed a hike, putting the policy rate near the low end of the BOJ’s neutral range estimate.
- The central bank is unlikely to rely on a precise neutral-rate figure in public guidance, signaling incremental decisions based on observed economic effects.
- A Reuters poll found 90% of economists expect a 25-basis-point increase next week, and more than two-thirds see the rate reaching at least 1.00% by the end of next September.
- Economists criticized debt-funded fiscal plans as long JGB yields hit an 18-year high, and most expect next spring’s wage gains to ease to a 5.0% median as the government appears open to a near-term hike.