(Bloomberg) — The Bank of Japan signaled in a summary of comments from last week’s policy meeting that it was close to raising interest rates for the first time since 2007, but officials have not signaled agreement on the specific timing of the hike. There wasn’t. Move.
Bank of Japan board members continued to discuss the prospect of lifting the negative interest rate policy at their January 22-23 meeting, with some members suggesting that the conditions for lifting the policy are improving.
One of the nine board members said, “It appears that the conditions for policy revisions, such as lifting the negative interest rate policy, have been met.” The official cited the possibility of a better outcome in this year’s annual wage negotiations and signs of improvement in the economy and inflation.
The yen appreciated and bonds depreciated as the opinion summary strengthened the view that the Bank of Japan was close to lifting its negative policy interest rate.
The Japanese currency rose as much as 0.3%, and the 10-year bond yield rose more than 4 basis points to 0.75%.
Aki Omori, a strategist at Mizuho Securities, said, “The Bank of Japan has clearly indicated that it is starting to take steps towards monetary tightening.The lifting of the negative interest rate policy is close to March or April.”
The outline gained market attention after Governor Kazuo Ueda suggested in a post-meeting press conference last week that the world was inching closer to the end of the world’s last zero-point interest rate.
Read more: IMF asks Bank of Japan to prepare for rate hike if inflation flares up
One board member said it would take several months for the bank to assess the impact of the earthquake that struck the northwestern United States on New Year’s Day.
“The Bank of Japan is likely to reach a stage where it can normalize monetary policy after monitoring and determining the extent of the impact of the Noto Peninsula earthquake on the macro economy over the next one to two months,” the committee member said.
Members discussed potential exit processes, considering everything from a series of unwind measures to purchases of risky assets. One member pointed out that it is only natural to stop purchasing exchange-traded funds (ETFs) once the target price becomes clear.
One member suggested that it would be better to act before the US Federal Reserve (Fed) and European Central Bank (ECB) decide to cut interest rates.
“Changes in monetary policy by foreign central banks could reduce the flexibility of the central bank’s monetary policy,” the member said. “Now is a great opportunity.”
The bank will announce its next policy decision on March 19th.
©2024 Bloomberg LP