(Bloomberg) -- Bank of Japan Governor Kazuo Ueda will have investors on high alert Wednesday when he lays out a detailed plan for quantitative tightening...
-- Bank of Japan Governor Kazuo Ueda will have investors on high alert Wednesday when he lays out a detailed plan for quantitative tightening after years of massive easing. He may also double down by adding an interest rate hike to boot.While only about 30% of BOJ watchers predict a hike as their base-case scenarios, almost nobody is ruling out the possibility, according to a Bloomberg survey.
Another key event at this gathering will be the release of the first plan to reduce bond buying. The bank will embark on the QT path after the massive monetary easing program that ran for more than a decade finally ended in March. The yen has been volatile, moving from a 38-year low to a two-month high in the space of a month as traders unwound positions focused on the rate gap between Japan and the US.
“A rate hike is likely at this meeting,” Karakama said. “It’s easier now. Otherwise, they could be back under pressure from a weak yen to act. This could be a key moment for the yen shifting from a massive weakening trend.” It remains to be seen how those political calls might affect the BOJ’s decision. They could have the opposite effect of persuading the BOJ to wait this month in order to avoid the appearance of having been influenced by them, Okasan’s Nakayama said.
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