MNI POLICY: BOJ To Hike Unless Stocks Slide
MNI (TOKYO) - The Bank of Japan will raise its policy rate at this week's meeting barring sufficient market volatility to provide a clear justification for a hold, MNI understands.
A hold on Friday without an obvious reason, particularly sustained equity market declines, would undermine the BOJ's credibility, Bank officials consider. They would also weigh the impact of a pause on the yen.
So far BOJ officials have been encouraged by the relatively stable markets which have followed President Donald Trump’s inauguration. (See MNI POLICY: BOJ Board To Discuss Jan Hike, Hold Possible)
The Bank has entered a blackout period ahead of the Jan 23-24 meeting and officials in charge of monetary policy are briefing each board member on topics including the executive’s opinions on monetary policy.
Policymakers, including Governor Kazuo Ueda and the two deputy governors, will form their final view after monitoring market moves and their background on Friday.
Market pricing implies a 90% chance of a 25-basis-point move higher this week to 0.50%, up from 40% in December, following Ueda’s signalling of a rate hike in mid-January.