2023-12-20 00:12:00
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08:12[The Bank of Japan remains on hold, what signal does it send? When will negative interest rates end? Summary of the latest interpretations from institutions]On December 19, the Bank of Japan issued a monetary policy statement, keeping the short-term policy interest rate unchanged at -0.1%, continuing to maintain an appropriate amount of Japanese government bond purchases, and guiding the 10Y Japanese government bond yield to remain around 0%, continuing Use 1.0% as the operational reference for the upper limit of the 10Y Japanese government bond interest rate. The asset purchase plan remains unchanged and the forward guidance remains unchanged.
Market expectations are divergent before the Bank of Japan’s interest rate meeting, and the focus is on whether it will exit the negative interest rate policy early. CITIC Construction Investment said that the cancellation of negative interest rates means the first interest rate increase in 17 years. Although the amplitude is only 10bp, it may have a greater shock to the Japanese economy and the trend of the yen. Considering that there are still risks in the Japanese economy and inflation trends, the Bank of Japan will raise interest rates here. This time it did not announce the cancellation of negative interest rates. The key to the Bank of Japan’s further actions lies in the confirmation of the virtuous “wage-inflation” cycle, and early 2024 may be an important time window for the implementation of interest rate increases. In addition, once morest the background of the sharp narrowing of the interest rate gap between the United States and Japan, exchange rate factors also affect the Bank of Japan’s consideration of the timing of raising interest rates.
Regarding the future trend of Japan’s inflation, the agency said that inflation is expected to continue to fluctuate slightly downward. First, there is still a high degree of uncertainty in wage and price trends, and the virtuous cycle between income and prices has yet to be confirmed. Second, as economic growth gradually moves out of the “post-epidemic recovery” model, subsequent economic momentum may decline compared with 2023, and insufficient domestic demand will gradually drag down prices. Third, as the central bank further tightens monetary policy, medium- and long-term inflation expectations may decline, affecting corporate pricing behavior.
CITIC Securities believes that maintaining the current policy may indicate that the Bank of Japan wants to ensure that the virtuous cycle of moderate wage and price increases is stable enough before proceeding with the normalization of monetary policy prudently, and does not want to hastily adjust the current negative interest rate policy, which has less obvious side effects. . We believe that the Bank of Japan may choose an opportunity to exit negative interest rates around April next year, and the yen may tend to appreciate in the first half of next year.
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