More BOJ watchers shift hike forecasts, seeing January unlikely
MORE Bank of Japan (BOJ) watchers joined those pushing back their predictions for the end of negative rates in the wake of the New Year’s Day earthquake and recent remarks by governor Kazuo Ueda.
BNP Paribas, Deutsche Securities and Mitsubishi UFJ Morgan Stanley Securities pushed back their forecasts, joining Morgan Stanley MUFG Securities in saying the bank is unlikely to scrap the negative rate at its Jan 22 to 23 meeting.
The main reasons cited by the economists are Ueda’s remarks indicating caution over an early move and the temblor that struck the nation’s northwest coast on Jan 1, raising uncertainties for the economy.
In an interview with public broadcaster NHK aired on Dec 27, Ueda indicated he’s unlikely to have enough data to make a determination about the subzero rate policy by this month’s meeting.
The remarks helped shift perceptions for economists including Kentaro Koyama, chief Japan economist at Deutsche Securities.
“We judge that the likelihood of ending the negative interest rate policy at the January monetary policy meeting has become almost zero,” Koyama wrote in a report.
Early last month, market speculation over a BOJ move in January gained momentum after deputy governor Ryozo Himino listed some potential benefits of a rate hike in a Dec 6 speech. That was followed by Ueda’s comments saying that his job overall will be more challenging from the year-end onwards. He said that just hours before meeting with Prime Minister Fumio Kishida, who is keen to mollify households contending with rising costs of living.
Naomi Muguruma, chief fixed income strategist at Mitsubishi UFJ Morgan Stanley, forecast the end of the negative rate in April. Ryutaro Kono, chief Japan economist at the BNP Paribas, and Koyama see a high probability of the move coming by the April gathering. BLOOMBERG
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