By eFXdata — Jan 17 - 09:01 AM
Synopsis:
Nomura now forecasts the BoJ to hike rates at the January Monetary Policy Meeting (MPM), citing reduced uncertainty about FY25 wage hikes and U.S. policy. However, the decision may hinge on developments following President-elect Trump’s inaugural address.
Key Points:
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Revised Timing:
- The next BoJ rate hike is now expected at the January MPM, advanced from the previous March projection.
- The decision reflects growing confidence in stable FY25 wage hike prospects and clarity on U.S. policies.
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Economic Forecasts:
- The BoJ is likely to raise CPI inflation forecasts, factoring in yen depreciation, higher oil prices, and increased rice prices.
- Despite the inflation forecast revisions, Nomura does not anticipate an accelerated pace of rate hikes.
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Uncertainty Factors:
- The BoJ may postpone its rate hike depending on the content of Trump’s inaugural address (20 January) and subsequent market reactions.
Conclusion:
Nomura expects a BoJ rate hike at the January MPM, driven by improved clarity on domestic and international economic conditions. However, Trump’s policy signals and market responses remain pivotal in shaping the final decision.
Source:
Nomura Research/Market Commentary