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CNBC survey: Bank of Japan seen holding rates, hike later
CNBC said all 16 economists it surveyed expect the Bank of Japan to keep its policy rate at 1.25% after Friday's meeting, with a hike possible in December or January.
- New headline Was: “Bank of Japan is expected to hold rates this week — but stay hawkish: CNBC survey”
- Our desk filed its story
Economists surveyed by CNBC expect the Bank of Japan to leave its policy rate at 1.25% at the end of its two-day meeting on Friday, after last month's increase to the highest level in 31 years1.
All 16 respondents in the Oct. 14-26 survey also said they expect the central bank to set the stage for a rate hike in December or January, as domestic inflation and wages continue to rise1.
Japan's core consumer prices excluding fresh foods rose 2.1% in September from a year earlier, CNBC said, the highest reading this year, as a weaker yen and energy costs feed through even with government energy subsidies1. Inflation-adjusted wages rose 1.5% in August, an eighth consecutive month of real-wage gains, according to the most recent government data cited by CNBC1.
Homin Lee of Lombard Odier told CNBC that macroeconomic factors support further tightening but that there may not be sufficient consensus on the policy board for successive hikes given fragility in the domestic bond market1. Sosuke Nakamura of Citi Research said he sees no clear signs of inflation accelerating enough to justify consecutive increases1.
Finance Minister Satsuki Katayama last week told lawmakers Japan was near a shift to sustained wage-driven inflation, while also citing higher import costs, CNBC said, citing a Reuters report1.
Nine of the 16 respondents expect the yen to trade between 157 and 158 against the dollar over the next month, CNBC said, with three-month forecasts ranging from 150 to 1601. Nine expect the 10-year Japanese government bond yield between 3% and 3.1% by year-end, up from 2.809%, and seven expect the 30-year yield at 4% to 4.1% from 3.829% as of Tuesday1.
Takuji Aida of Credit Agricole told CNBC the next hike is likely in January, when the bank publishes its quarterly outlook1. Thirteen respondents expect a terminal rate of 1.75% to 2% around mid-20271. Masato Koike of SOMPO Institute Plus said he expects the BOJ to stop around 1.75% to avoid excessive pressure on growth1.
