JAPAN INTEREST RATE DECISION PREVIEW: BOJ EXPECTED TO HIKE INTEREST RATES FOR FIRST TIME SINCE 2007
- The Bank of Japan could deliver the first rate hike since 2007.
- Japanese Unions clocked the largest wage increase in over three decades.
- BoJ’s Governor Kazuo Ueda linked monetary tightening with higher wages.
- USD/JPY could collapse towards 146.48 on a hawkish decision.
The Bank of Japan (BoJ) will announce its monetary policy decision on Tuesday, pretty much at the same time that the Reserve Bank of Australia (RBA) will do the same. Central banks stand out this week, which will also include the decisions of the United States (US) Federal Reserve (Fed) and the Bank of England (BoE).
The BoJ is a particular case, as it is the only central bank maintaining an ultra-loose monetary policy. Interest rates in Japan have been steady at -0.1% since 2016, with policymakers claiming lagging wage increases and doubts about sustainable healthy inflation require continued caution. To keep rates depressed, the BoJ also introduced the Yield Curve Control (YCC) in September 2016, as inflation remained stubbornly below target.
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