Bank of Japan to wait until ‘at least’ March before a potential hike: BofA
2024.12.20 05:33
Investing.com — The Bank of Japan (BoJ) has decided to keep its target for the uncollateralized overnight call rate at 0.25%, a decision that was anticipated by 56% of analysts surveyed by Bloomberg, including BofA.
The policy board voted 8-1 in favor of maintaining the current rate, in a meeting held today. The dissenting vote came from board member Naoki Tamura, who suggested a 25 basis point increase. Tamura reasoned that the current economic conditions and price trends are in line with the Bank’s expectations, indicating a greater risk of price increases.
Despite this, the BoJ’s policy statement did not introduce any significant changes. The Bank’s assessment of the current economic conditions, outlook, and risk factors remain largely the same as those detailed in the October Outlook Report.
In a press conference following the meeting, Governor Ueda took a decidedly dovish stance. When asked why the policy board chose to maintain the current rate despite recent domestic data aligning with the BoJ’s expectations, Ueda pointed to two main factors.
Firstly, he expressed a need to gather more information on the potential for wage increases in the fiscal year 2025. Secondly, he noted ongoing uncertainties around the outlook for overseas economies, particularly the US.
“Ueda’s comments today gave a stronger indication that the central bank may need to wait until at least the March MPM (BVMF:) to gain sufficient information to make the judgment for a hike,” Izumi Devalier, BofA economist, said in a note.
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