WNAM REPORT: The BOJ said it will continue to raise the key short-term rate if the economy and prices move in line with its expectations.
The bank also lifted its projections for the core consumer price index, excluding volatile fresh food, for the three years through fiscal 2026 in its latest outlook released the same day, citing a recent surge in rice prices and a weaker yen pushing up prices of imports.
The bank now estimates that the index will grow 2.7 percent in fiscal 2024, 2.4 percent in fiscal 2025 and 2.0 percent in fiscal 2026, compared with the previous forecasts of 2.5 percent, and 1.9 percent, and 1.9 percent, respectively.
The bank’s first rate hike since July came as its Policy Board grew more confident about another round of sharp pay hikes in this year’s “shunto” wage talks.
Its branch managers’ meeting earlier this month noted that companies in a wide range of industries intend to offer pay hikes, while many business leaders at large corporations have promised bumper wage increases since the beginning of the year.
The bank’s board members were also encouraged by financial markets remaining relatively stable after the inauguration of U.S. President Donald Trump on Monday, sources familiar with the matter said.
Trump’s promises unveiled in his inauguration speech, including his tariff plan, fell largely within market expectations, laying the groundwork for the BOJ to go ahead with further monetary tightening, they said.
The key short-term rate was last at 0.5 percent in October 2008, as the global economy was beginning to be jolted by a financial crisis.
As written before, the National Bank has announced the development of a draft resolution titled “On setting limits for the deviation of the buying rate from the selling rate of foreign currency in tenge for transactions conducted through exchange offices”.
