The Bank of Japan is anticipated to increase its interest rate at the policy meeting scheduled for the end of this week, marking the first significant hike since January this year. Market experts predict that the overnight borrowing rate could be raised to 0.75 percent, the highest level since 1995. Under the leadership of Governor Kazuo Ueda, the policy committee is likely to unanimously approve this increase, as several members had previously expressed support for a rate hike. Economic data indicates strong wage growth in Japan and a lesser-than-expected impact from U.S. revenues, boosting market confidence in raising interest rates. Bank officials believe that although the rate may reach 0.75 percent, it is not yet considered the “neutral rate,” with some officials still viewing 1 percent as low. Experts suggest that if the Bank of Japan signals further tightening, it could help stabilize the yen but may also lead to higher Japanese bond yields, potentially pressuring the government in preparing the next fiscal year’s budget. Overnight index swap data shows traders assign a 95 percent probability to a rate increase at this meeting, double the likelihood from early last month. The policy statement will be released around midday local time, followed by a press conference by Governor Ueda at 3:30 pm. This decision is regarded as significant in the context of Japan’s current economic conditions and the global economic environment.
Source: binance
