Japan's 'Negative Interest Rate' Ends... Likely Lifted in April

The Bank of Japan (BOJ), Japan's central bank, is gaining momentum in forecasts that it will lift its negative interest rate policy in April, according to a report by the Nihon Keizai Shimbun (Nikkei) on the 24th.

Nikkei stated, "The final confirmation process for lifting the BOJ's negative interest rate policy has entered its last stage," adding, "Many in the market believe the policy will be lifted in April, when the results of spring wage negotiations can be assessed."

[Image source=Yonhap News]

At the financial policy meeting held the previous day, the BOJ decided to maintain its large-scale monetary easing policy. The short-term interest rate was kept at -0.1%, and the long-term interest rate benchmark, the 10-year government bond yield, was guided to 0%.

BOJ Governor Kazuo Ueda, after announcing this, said at a press conference that the possibility of achieving the goal of stabilizing the consumer price inflation rate at 2% accompanied by wage increases is gradually increasing. The BOJ has presented two conditions for ending the negative interest rate policy: continuously maintaining a 2% inflation rate and establishing a virtuous cycle of wage and price increases.

Japan's next monetary policy meetings are scheduled for March 18-19 and April 25-26. Nikkei reported that since more information can be obtained in April than in March, the prevailing view is that the negative interest rate will be lifted in April. Governor Ueda said the previous day, "Compared to March, the amount of information in April will increase," and "We will make decisions based on newly added information at each point in time."

In April, the BOJ will release its quarterly "Outlook for Economic Activity and Prices" report, and the results of the nationwide short-term economic survey of enterprises will also be announced. A branch managers' meeting, which helps grasp wage increase situations in regional companies, will be held. Additionally, since many companies close their fiscal year in March, considering the yen's appreciation effect due to rising interest rates, April is seen as a better timing.

Meanwhile, Nikkei also observed that since there will be a by-election for the Japanese parliament in April, there is a possibility of a rate hike in March. Furthermore, if the U.S. Federal Reserve (Fed) cuts its benchmark interest rate early, the BOJ might lift the negative interest rate after summer to prevent a sharp narrowing of the interest rate gap between the U.S. and Japan.

This content was produced with the assistance of AI translation services.