The BOJ will boost its benchmark interest rate to 0.5% on Friday, the largest increase in 18 years.
Bloomberg reported on Jan. 22 that BOJ Governor Kazuo Ueda and the board would hike the overnight call rate by 25 basis points to 0.5%. If verified, this would be the biggest rise since February 2007.
The study cited strong wage growth and no big market shocks during U.S. President Donald Trump’s second term as factors for the raise.
Overnight-indexed swaps suggest traders’ conviction about the rate rise has increased from 50% last month to almost 100%. Three-quarters of economists predict the raise, according to a Jan. 21 study.
Wage data is available, and markets have remained placid since Trump’s victory. Bloomberg reported a definite increase timetable.
Japan has the lowest borrowing rates among industrialized nations. For the BOJ’s quarterly estimate, announced Friday, analysts anticipate inflation to continue on target until March 2027.
Ueda is unlikely to commit to a plan. Market analysts fear that his cautious tone might weaken the yen and increase inflation. Tokyo may intervene in currency.
At 12:00 local time, the BOJ will deliver its economic outlook report and policy announcement. Ueda will likely answer questions regarding the BOJ’s future measures during a 3:30 p.m. news conference.
Wall Street seems quiet before the BOJ decision. Wednesday evening, S&P 500 futures declined less than 0.1%. Dow Jones and Nasdaq 100 futures fell 5 points and 0.1%, respectively.
The S&P 500 set a record on Wednesday by rising 0.61%. The Dow climbed 0.30% and the Nasdaq 1.28%. Investors expect Trump-era tax cuts and deregulation, as well as solid U.S. economic growth.
Corporate profits also reassure investors. Netflix stock rose almost 9% following its results release. Nvidia and Bitcoin whales MicroStrategy and BlackRock have. The latest BOJ rate rise devastated crypto prices. Bitcoin dropped approximately $10,000 in five hours following its release on August 5, 2024. Investor panic drove the market cap below $2 trillion for the first time in years.
Bloomberg reported on Jan. 22 that BOJ Governor Kazuo Ueda and the board would hike the overnight call rate by 25 basis points to 0.5%. If verified, this would be the biggest rise since February 2007.
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