BOJ to deliver 1st hike in 17 years tomorrow?
There is possibly no bigger trading event this week than the Bank of Japan’s decision on Monday.
The groundwork for abandoning negative interest rates has been subtly laid since last year, and now, this could very well be the month they choose to make their move.
The prospect of ending a policy entrenched for nearly two decades could significantly move the USDJPY.
The catalyzing force for the BoJ to end negative interest rates are the substantial wage hikes big corporations and their labor unions agreed on this year.
On Friday, the Japanese Trade Union Confederation, the country's largest labor organization, disclosed that this year's annual wage negotiations produced remarkable outcomes. Major corporations witnessed an average hike of 5.28%, the largest wage increase in 33 years.
Because of this, The Bank of Japan could be thinking that the current economic climate is OK for sustaining a stable 2% inflation rate in an environment without negative interest rates.
Even in the eventuality of the negative rate policy ceasing, Governor Ueda has emphasized the continuity of accommodative monetary conditions. The BOJ will likely keep interest rates at zero percent. So, watch out for overreactions to this news too, and corrective moves in Yen pairs.
The groundwork for abandoning negative interest rates has been subtly laid since last year, and now, this could very well be the month they choose to make their move.
The prospect of ending a policy entrenched for nearly two decades could significantly move the USDJPY.
The catalyzing force for the BoJ to end negative interest rates are the substantial wage hikes big corporations and their labor unions agreed on this year.
On Friday, the Japanese Trade Union Confederation, the country's largest labor organization, disclosed that this year's annual wage negotiations produced remarkable outcomes. Major corporations witnessed an average hike of 5.28%, the largest wage increase in 33 years.
Because of this, The Bank of Japan could be thinking that the current economic climate is OK for sustaining a stable 2% inflation rate in an environment without negative interest rates.
Even in the eventuality of the negative rate policy ceasing, Governor Ueda has emphasized the continuity of accommodative monetary conditions. The BOJ will likely keep interest rates at zero percent. So, watch out for overreactions to this news too, and corrective moves in Yen pairs.
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