The BoJ hiked rates in March and July – how is December shaping up?

In 2024, the Bank of Japan (BOJ) implemented significant shifts in its monetary policy to address evolving economic conditions:

• March 2024: The BOJ ended its long-standing negative interest rate policy, which had been in place to combat deflation and stimulate economic growth. This move marked the first rate increase in 17 years, signaling a shift towards policy normalization.The BOJ raised its short-term policy interest rate to 0.1%, effectively moving away from the negative rate of -0.1% that had been maintained since 2016.

• July 2024: The central bank raised its short-term policy interest rate to 0.25%, further moving away from its ultra-loose monetary stance. This adjustment aimed to balance economic growth with rising inflationary pressures.

• December 2024: As of mid-December, the BOJ is expected to maintain the current interest rate at 0.25% during its policy meeting. However, there is anticipation of a potential rate hike by 25 basis points by the end of March 2025, depending on economic indicators and wage growth outcomes.

These policy adjustments reflect the BOJ’s response to domestic economic improvements, including rising inflation and wage growth, as well as external factors such as global economic uncertainties and trade policies.

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Coming up:

• The wait for the Bank of Japan Statement is now live!

Previews:

• BOJ is expected to hold its policy rate at 0.25% in its December 18-19 meeting – preview

• BOJ reportedly sees little cost to waiting for next rate hike
• BOJ reportedly erring towards keeping interest rates unchanged
• BOJ reportedly considers skipping rate hike
• BOJ to raise interest rate to at least 0.50% by end-March, 51 of 52 economists say
• Goldman Sachs expect the Bank of Japan to remain on hold at 0.25% at the December meeting

• Here’s a view saying BoJ to hike today (or maybe January!) – stronger yen in months ahead

This article was written by Eamonn Sheridan at www.forexlive.com.