BOJ to hold off next rate hike until September, says former central bank executive

Momma says that the BOJ is likely to want to wait until September at least before hiking rates again. That is so policymakers can gather more information from the government’s monthly wage data for July and August, to confirm whether or not the stronger wage hikes from the shuntō have passed through to households.

Adding that the BOJ will also probably want to align such a move with a further recovery in the economy. And that might only show up when the central bank gets to observe the Q2 GDP data.

He also notes that compared with ending negative rates, hiking them by another 25 bps would have a bigger impact on the general public with regards to mortgages and borrowing costs.

For now though, Momma says that the BOJ still has other tools to work with. He expects them to be preparing for a formal reduction in bond purchases. And that “there’s a good chance” we could see that at the next meeting in June.

This article was written by Justin Low at www.forexlive.com.