According to the latest public opinion poll, approximately 74% of economists expect the Bank of Japan to raise interest rates at the policy meeting ending on January 24th, a significant increase from the previous 52%. Both Bank of Japan Governor Kazuo Ueda and Deputy Governor Noriyasu Himinou have indicated this week that the January meeting will decide whether to raise rates. This decision is likely to depend on the latest developments in global financial markets, especially the policies that the incoming U.S. President Trump might introduce after his inauguration on January 20th.
A Bloomberg survey of 53 economists shows that nearly three-quarters of respondents believe the Bank of Japan will implement a rate hike at the January meeting, while about 23% think the hike may be postponed until March. This survey result reflects a significant rise in market expectations for a tightening policy by the Bank of Japan.
Masamichi Adachi, Chief Japan Economist at UBS Securities, stated in the survey: "The decision to raise rates will largely depend on the condition of the financial markets. If Trump's policies do not cause market turmoil, then the likelihood of a rate hike is high."
Informed sources reveal that Bank of Japan officials currently believe that if Trump's post-inauguration policy actions do not excessively negatively impact the global economy and financial markets, the Bank of Japan might raise rates at next week's meeting. About half of the economists think that Trump will not take actions before his inauguration that could undermine the global economic outlook or disrupt financial market stability, while approximately a quarter of respondents believe such situations may occur or are very likely to happen.
Analysts point out that the market's expectations for a possible rate hike by the Bank of Japan are closely related to the stability of the global economic situation and financial markets. If Trump's policy directions do not cause significant shocks to the global market, the rate hike action by the Bank of Japan in January may become an important step in monetary policy tightening.
