On September 20, 2023, the Japanese flag will be hoisted over the Bank of Japan’s head office in Tokyo.Reuters/Issei Kato/File photo Obtaining license rights
TOKYO, Nov 22 (Reuters) – More than 80% of economists in a Reuters poll say the Bank of Japan will end its negative interest rate policy next year, confident that the bank is close to moving away from its controversial monetary settings. There is.
Bank of Japan Governor Kazuo Ueda faces the difficult task of steering Japan away from the extremely accommodative policies of the past decade without causing market turmoil or undermining a fragile economic recovery.
None of the 26 economists predicted changes at the next Bank of Japan meeting in December, but many predicted that Japan’s negative interest rate policy, which has set short-term deposit rates at -0.1%, would reach its limit next year. people had predicted.
In a November 15-20 opinion poll, 22 out of 26 economists (85%) said the Bank of Japan would end its policy by the end of next year. This was up from 63% in the October survey and 52% in the September survey.
The remaining four selected “after 2025.”
At its policy meeting in October, the Bank of Japan revised its bond yield controls by redefining 1.0% as a more flexible “upper limit” than a strict cap.
Having gutted YCC, the Bank of Japan’s next focus is to end its negative interest rate policy and push short-term interest rates to zero, sources familiar with the matter earlier told Reuters.
In the poll, nearly 85% of respondents expected the Bank of Japan to end the YCC policy, with the remainder saying it would readjust the system.
Looking ahead to next year
The 22 economists surveyed chose 2024 as the end date for negative interest rates, but more than half, 12, chose the April 25-26 meeting. 3 chose her July, 2 chose her June, and 1 chose her October.
The four companies, Capital Economics, Dai-ichi Life Research Institute, Mitsubishi UFJ Morgan Stanley Securities, and T&D Asset Management, said they could realize this as early as January.
Hiroshi Namioka, chief strategist and fund manager at T&D Asset Management, said it would be clear by then that the Bank of Japan would take inflationary pressures and developments in wage negotiations into account when determining the course of short-term interest rates.
“Negative interest rates will be lifted as a response to inflation if inflation persists, or as a “continuation of easing” if inflation pressures appear to be weakening,” the Bank of Japan argues. One could argue that setting interest rates at 0.00% is problematic. Mr. Namioka said, “It is thought that it is loose.”
Focus on wages and economic measures
In the survey, 74% of economists said that next year’s average wage growth rate and basic salary increase will exceed this year’s 3.58% increase at large Japanese companies. When asked if the same thing would happen to Japanese companies in general, including small and medium-sized enterprises, the percentage dropped to 65%.
Meanwhile, nearly two-thirds (16 out of 25) of economists said it was “very unlikely” that the government’s latest stimulus package would achieve its forecast of boosting gross domestic product (GDP) growth by 1.2%. ” he said.
More than half of respondents in multiple opinion polls said they were not impressed by the policy that would reduce annual per capita income tax and other taxes by 40,000 yen ($267.34) and provide 70,000 yen to low-income households. I answered. The package’s unpopularity has been cited as one reason why Prime Minister Fumio Kishida’s public support plummeted.
Chiyuki Takamatsu, chief economist at Fukoku Life Insurance Co., said, “A one-time income tax cut would have a very limited boost.”
(For more articles in the Reuters World Long-term Economic Outlook poll package:)
(1 dollar = 149.6200 yen)
Satoshi Sugiyama Report; Voting Credit: Veronica Khongwir and Sujith Pai.Editing: Sam Holmes
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