Bank of Japan Likely to Keep Interest Rates Steady

TOKYO (Reuters) – A recent survey by money market brokerage Ueda Yagi Tanshi indicates that over 90% of market participants expect the Bank of Japan (BOJ) to maintain interest rates at this week’s policy meeting.

The survey, conducted from December 12-16, targeted 150 banks, securities firms, insurers, and other financial institutions, ahead of the BOJ's two-day meeting concluding on Thursday.

Of those surveyed, 91% anticipate that the BOJ will keep short-term interest rates unchanged at 0.25% this week. In contrast, 95% predict an increase in the overnight call rate, which is defined as the BOJ’s policy target, in three months—a notable rise from the 67% expectation in the previous October survey.

The BOJ had ended negative interest rates in March and raised its short-term policy target to 0.25% in July. They have suggested a willingness to hike rates again if wages and prices align with projections, aiming for a stable inflation rate of 2%.

However, the timing of the next rate hike remains uncertain, leading to fluctuating market expectations between December and January.

Sources inform Reuters that the BOJ is likely to maintain steady interest rates in December, as policymakers prefer to assess overseas risks and insights regarding next year’s wage outlook more thoroughly.

A majority of economists polled by Reuters from December 4-11 also expect the BOJ to keep interest rates steady this month, marking a shift from the November poll that indicated a slight majority forecasting a potential rate hike.