Bank of Japan Likely to Hold Interest Rates Steady, Survey Reveals

Money market brokerage Ueda Yagi Tanshi found that more than 90% of market players anticipate the Bank of Japan to maintain interest rates at this week's policy meeting.

Targeting 150 banks, securities companies, insurers, and other financial institutions, the poll was carried out between December 12–16 in advance of the central bank's two-day conference that ends on Thursday.

91% of respondents stated that they anticipate the central bank will maintain short-term interest rates at 0.25 percent this week. However, 95% of respondents—up from 67% in the previous survey—foresee an increase in the overnight call rate, which the BOJ sets as its policy aim, in three months.

The BOJ increased its short-term policy target to 0.25 percent in July after ending negative interest rates in March. It has indicated that it is prepared to raise again if prices and wages move as anticipated, strengthening the belief that Japan will experience inflation of 2% for the foreseeable future.

Market anticipation of a move has fluctuated between December and January as a result of the central bank's caution on the timing of the next rate hike.

Since policymakers would rather spend more time examining foreign concerns and hints about the wage outlook for the upcoming year, the BOJ is inclined to maintain interest rates unchanged in December. According to the sources.