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The governor of the Bank of Japan, Kazuo Ueda, answers the questions during a conversation of governors about Japanese inflation and monetary policy in the International Monetary Fund (IMF) and the Autumn Meeting of Group 2024 of the World Bank in Washington, USA ., October 23, 2024.
Kaylee Greenlee Beal | Reuters
The Bank of Japan increased rates by 25 basic points on Friday to 0.5%, which takes its policy rate at its highest level since 2008, since it seeks to normalize its monetary policy.
The movement is in line with the expectations of the CNBC survey from January 15 to 20, which saw a The overwhelming majority of economists predict a walk.
After the decision, the Japanese marginally weakened to operate 156.09 against the dollar, while the country’s reference point Nikkei 225 The Actions Index increased 0.59%.
The senior Boj officials, including Governor Kazuo Ueda and Vice Governor Ryozo Himino, had indicated the will of the Central Bank to increase rates.
The BOJ will be observing closely the salary negotiations of “Shado”, and hopes to see “strong salary walks” in fiscal year 2025, Himino said in a speech to business leaders on January 14.
In a note on January 21, Vincent Chung, co-portfolio for the strategy of diversified income bonds in T. Rowe Price, said that progress, an increase in the rate will be followed by “a series of gradual increases, which could Generate the 1% policy rate for the end of the year. “
He added that the policy rate could even exceed 1%, since this is closer to the lower end of the neutral rate range of the BOJ.
In September, the member of the Boj Naoki Tamura Board said the neutral rate “It would be at least about 1 percent,” although Boj does not have an official prognosis of neutral rates.
Chung said that, although Japanese officials have indicated that the volatility of yen has been significant, any substantial monetary intervention similar to what last year seems unlikely.
Last July, Yen will reach its weakest level against the dollar since 1986reaching 161.96. Japanese authorities Later confirmed that they spent 5.53 billion yenor $ 36.8 billion, to prop up Yen in July.
Japan I spent more than 15.32 billion yen ($ 97.06 billion) to underpin the currency in the course of 2024.
Chung said inflation in the United States could increase this quarter later and, together with sustained economic growth, this could exert ascending pressure on yields, which could strengthen the dollar, weakening the Yen.
“Investors should also consider that with possible important policy changes in trade and the Fed that is approaching a pause, the risk of growth of two faces is probably greater this year than in 2024. Consequently, we expect a volatility made in USD/JPY to stay high in 2025, “he concludes.
