The Bank of Japan (BOJ) is widely expected to maintain its current policy rate of 1.25% at the conclusion of its two-day meeting on Friday, according to a CNBC survey. All 16 economists and analysts surveyed anticipate no change, as the central bank just raised rates last month to their highest level in 31 years.
However, all respondents foresee the BOJ setting the stage for a rate hike either in December or January next year. The expectation is driven by rising domestic inflation and wages, which support further policy tightening. Homin Lee, senior macro strategist at Lombard Odier, noted that while macroeconomic factors justify additional tightening, the fragility of the domestic bond market may hinder successive rate hikes.
Sosuke Nakamura, an economist at Citi Research, added that there are no clear signs of inflation accelerating enough to warrant consecutive rate hikes. The survey, conducted from October 14 to 26, also revealed that nine respondents expect the yen to trade between 157 and 158 over the next month.