HomeEconomic IndicatorReuters poll: Over 80% of economists urge BOJ to eliminate negative interest...

Reuters poll: Over 80% of economists urge BOJ to eliminate negative interest rates in April.

Bank of Japan to End Negative Interest Rates in April, Say Economists

Major Shift in Monetary Policy Expected

More than 80% of economists polled by Reuters predict that the Bank of Japan will abandon its negative interest rate policy in April, marking a significant departure from its current approach. Additionally, 76% of economists anticipate the end of yield curve control at the same meeting, signaling an impending shift in ultra-loose monetary conditions.

Policy Change Amid Recession

Despite Japan’s economy slipping into a recession, sources have indicated that the BOJ is on track to end negative interest rates in the coming months. The majority of economists in the poll foresee the central bank scrapping its minus 0.1% short-term deposit rate, which has been in place since January 2016.

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Factors Influencing Decision

Market economists at SMBC Nikko Securities believe that the BOJ’s decision in April will be influenced by the preliminary results of annual labor-management wage talks for big firms and the input from BOJ branch managers on wage trends in small and mid-sized firms.

End of Yield Curve Control

The poll also revealed that a significant majority of economists expect the BOJ to end yield curve control, with 19 respondents anticipating this move to happen simultaneously with the cessation of negative rates. This aligns with Governor Kazuo Ueda’s emphasis on Japan’s monetary conditions likely remaining accommodative even after the policy changes.

Anticipated Wage Growth

Economists predict that average wage growth and base salary increases in the next fiscal year starting in April will exceed this year’s figures at big Japanese firms. The range of pay increases for big companies is expected to fall between 3.6% and 4.36% in mid-March.

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Market Sentiment and Future Expectations

Market economists express the need for timely policy shifts to avoid missing the right moment amidst increasing foreign factors’ uncertainty. The poll also indicates a strong consensus among economists, with 91% predicting the abandonment of negative rate policy by the end of the year, and 86% expecting the end of yield curve control.

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