1 in 2 Japanese Bond Experts Predict "Additional Rate Hike in December"

45% "Next LDP President Will Be Koizumi Shinjiro"

One out of two people involved in the Japanese bond market believes that the Bank of Japan (BOJ) will implement an additional policy interest rate hike in December this year.

On the 3rd, Nihon Keizai Shimbun (Nikkei) reported that a survey conducted by financial information company QUICK on the monthly bond market in August showed these results.

[Image source=Reuters Yonhap News]

When asked about the timing of the next rate hike, 48% of respondents pointed to December 2024. The second most common response was January 2025 (32%).

Previously, the BOJ raised the short-term policy interest rate from 0?0.1% to 0.25% on July 31. However, following weaker U.S. employment statistics, the Nikkei 225 average stock price, Japan’s representative stock index, plunged by 4,451 points on the 5th and then rose by 3,217 points on the 6th, causing global stock markets to fluctuate significantly.

BOJ Governor Kazuo Ueda stated at the House of Representatives’ Financial Affairs Committee hearing on the 23rd of last month that "the financial market is still unstable" and that he would "watch with very high tension." Regarding the rate hike, he said there is no change in the policy of adjusting monetary easing under the condition that achieving a 2% inflation rate is possible.

Regarding the most notable factors affecting bond price fluctuations over the next six months, 14% of respondents cited overseas interest rates. This is a 12-point increase compared to the previous survey, marking the highest level in nine months.

Regarding the impact of the upcoming Liberal Democratic Party (LDP) presidential election scheduled for the end of this month on the bond market, 52% responded that there would be "almost no impact."

When asked who would become the LDP president, 45% of respondents chose former Environment Minister Shinjiro Koizumi.

This survey was conducted from the 27th to the 29th of last month targeting 181 bond market participants including securities companies, life and non-life insurance companies, and banks, with 124 respondents.

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