BusinessBOJ Expected to End Negative Rate Policy Next Week, According to Nikkei

BOJ Expected to End Negative Rate Policy Next Week, According to Nikkei

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© Reuters. FILE PHOTO: People stroll past the Bank of Japan edifice in Tokyo, Japan on January 23, 2024. REUTERS/Kim Kyung-Hoon/File Photo

Anticipated Shift in BOJ’s Policy

Speculations are rife that the Bank of Japan may soon abandon its negative interest rate policy, driven by significant wage increases announced by major corporations during this year’s salary negotiations, as reported by the newspaper over the weekend.

Internal Coordination for Policy Ending

According to the economic daily, the BOJ has initiated discussions both internally and externally regarding the termination of its negative interest rate strategy, signaling a potential shift in the central bank’s monetary stance.

Record Wage Hikes by Major Firms

Japan’s largest companies have agreed to implement a substantial wage increase of 5.28% for the year 2024, marking the most significant pay raise in over three decades, as disclosed by the country’s primary labor union group recently.

Support for Policy Modification

The announced wage increments have reportedly garnered support for a policy alteration even from those who are usually cautious about modifying monetary measures, according to sources quoted by the Nikkei.

Dependency on Wage Negotiation Outcomes

BOJ officials, led by Governor Kazuo Ueda, have emphasized that the decision to shift away from negative rates hinges on the results of this year’s wage discussions between employees and employers.

Potential Decision Next Week

Sources have hinted that the BOJ might deliberate the termination of negative interest rates in the upcoming week, particularly if the preliminary reports on big corporations’ wage talks prove to be positive.

Market Expectations and Government Insight

The pronounced increase in wage disclosures has raised expectations of the BOJ concluding its eight-year-long negative rate policy next week, with government insiders suggesting that a prompt decision by the central bank would be preferable to a delayed one.

The Bank of Japan, due to a communication blackout, refrained from providing immediate comments on these speculations and reports.

Public Opinion and Expectations

A recent Reuters survey showcased a shifting sentiment among economists, with 35% anticipating the BOJ to exit negative rates in the upcoming meeting, up from previous months, though still lower than those predicting a similar move in the subsequent meeting in April.

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