BOJ to Make Rate Hike Soon: Updated January 17, 2025.

 

BOJ to make decision on next rate hike this month, deputy chief says

Article Source:  https://mainichi.jp/english/articles/20250114/p2g/00m/0bu/021000c

Ideas:

It looks like the BOJ is trying to be more transparent with more attempts at communication as in the past they seem to have been not so transparent as to what they might do.

At the same time, more or better communication doesn't mean there is going to be rate hike, just a consideration of a rate hike in the future.

If prices continue to remain high and the Japanese economy is not showing signs of improvement, most likely there is not going to be rate hike, as the BOJ will use the same excuse they need to see more data before making a decision.

Just what does the Japanese economy needs to look like for the BOJ to make a move, but at times it seems a little unclear what it might be.

The wage situation is improving but maybe not for all Japanese companies can meet the expectations what the BOJ wants. For example large companies might increase wages again at 5+ percent but the challenge is for small and midsize companies to try and meet the same expectations.

Over 70 percent of Japanese workers work for small and midsize companies an not the large name-brand Japanese companies.

While there might be some certainty related to economic trends and prices moving in line with BOJ expectations, but we have seen this before and prices and inflation make a change and things don't work out as expected.

But its quite possible the BOJ is sending signals to the financial community and businesses that a rate increase is possible if the situation continues to improve.

The key indicator might be wage increases and the BOJ wants to see not only large company wage increases but small and midsize companies too having similar wage increases.

Yes, the next US administration could have an affect on the BOJ's decision to increase the rate, and more importantly how the global economy will react to the new US administration and what it might do.

Because there is a lot  of uncertainty with the new US administration the BOJ might, again, take a wait and see approach until it see what the US Admin, is going to do exactly related to China, Japan, and the rest of the global economy.

But if there is going to be a rate hike by the BOJ most likely it will not be that much, as they don't want to cause any harm with the rate hike and the Japanese economy.

And yes, the Jan. 20 inauguration speech will tell a lot about what is going to happen, but at the same time, don't expect everything to be said and done and the first week and first month will tell a lot more about what is going to happen.

It seems the BOJ might be saying that effective communication is important but don't expect too much from the memos and such before the meetings to be held, as things could change very quickly in Japan.

Have a nice day!