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MNI BoJ Preview - January 2024: Policy Normalisation Is Coming But Not Yet

BOJ

EXECUTIVE SUMMARY

  • Our analysis aligns with the prevailing consensus, anticipating the BoJ to continue normalising its policy in 2024, though such adjustments are not anticipated at this week's meeting.
  • Instead, both our perspective and the consensus majority anticipate the BoJ to implement a policy rate increase during the meeting scheduled for April 26, coinciding with the release of the next Quarterly Outlook Report.
  • This delay in exiting the Negative Interest Rate Policy (NIRP) is grounded in several considerations: an evaluation of the impact of the earthquake, conclusion of the shunto wage negotiations, no incentive to surprise the market and the need to transition from an explicit easing bias to a tightening bias.
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