Economists predict BOJ to end negative rates by next year

Economists are anticipating an end to the Bank of Japan’s (BOJ) long-standing negative interest rates by next year. This forecast comes as Japan’s inflation rates have consistently exceeded the BOJ’s target for over a year, signaling a potential shift in the central bank’s accommodative policy.

The BOJ has scheduled a meeting for December 18-19, where it is unlikely to alter current rates. However, the situation may evolve come spring 2024, as the bank plans to review pay rises during wage talks. The outcome of these discussions could influence the bank’s stance on monetary policy, which has been aimed at combating what was once seen as a temporary spike in inflation.

Adding to the anticipation, Japan’s national inflation figures for October are set to be released on Thursday at 18:30 ET (23:30 GMT). These figures are particularly significant following Tokyo’s Consumer Price Index (CPI), which showed a year-over-year jump of 3.3% in October, underscoring the sustained pressure on prices.

The central bank’s policy review in the spring will be closely watched by investors and policymakers alike, as it may signal a turning point in Japan’s approach to its monetary policy amidst persistent inflationary pressures.

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