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BOJ: MNI BoJ Preview - January 2025: Almost Certain To Hike

BOJ
Central Bank NewsAPACJapanBank of JapanBulletMarketsFixed Income BulletsForeign Exchange Bullets

EXECUTIVE SUMMARY

  • The Bank of Japan (BoJ) will announce its latest monetary policy decision this Friday, with expectations that it will move further along its policy normalisation path. Both market consensus and our analysis suggest a 25bps rate hike as the most likely outcome.
  • The BoJ raised rates twice in 2024, first in March and again in July. However, it has maintained a hold since then, largely due to market volatility, including significant yen swings after the July hike. Political uncertainty has also played a role.
  • Bloomberg consensus indicates that 31 analysts expect a 25bps hike, one predicts 10bps, and 13 expect a hold. Markets are pricing in a 94% chance of a quarter-point increase.
  • Looking ahead, the BoJ is expected to maintain a cautious path, with 25bps hikes every six months.
  • In the January Outlook Report, we expect the BoJ to maintain its economic growth forecast but slightly raise its inflation outlook.
  • Full preview here:  
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EXECUTIVE SUMMARY

  • The Bank of Japan (BoJ) will announce its latest monetary policy decision this Friday, with expectations that it will move further along its policy normalisation path. Both market consensus and our analysis suggest a 25bps rate hike as the most likely outcome.
  • The BoJ raised rates twice in 2024, first in March and again in July. However, it has maintained a hold since then, largely due to market volatility, including significant yen swings after the July hike. Political uncertainty has also played a role.
  • Bloomberg consensus indicates that 31 analysts expect a 25bps hike, one predicts 10bps, and 13 expect a hold. Markets are pricing in a 94% chance of a quarter-point increase.
  • Looking ahead, the BoJ is expected to maintain a cautious path, with 25bps hikes every six months.
  • In the January Outlook Report, we expect the BoJ to maintain its economic growth forecast but slightly raise its inflation outlook.
  • Full preview here: