Japanese national flag is hoisted atop the headquarters of Bank of Japan in Tokyo, Japan September 20, 2023. REUTERS/Issei KatoTOKYO : A growing number of Bank of Japan policymakers are warming to the idea of ending negative interest rates this month on expectations of hefty pay hikes in this year's annual wage negotiations, four sources familiar with its thinking said.
Significant pay hikes will likely heighten the chance of action in March, as the offers by big firms usually set the tone for those by smaller firms nationwide, the sources said on condition of anonymity due to the sensitivity of the matter. The yen has been rising against the dollar on growing speculation that the BOJ could end negative rates soon, and bets of imminent rate cuts by the U.S. Federal Reserve. It rose to 146.95 to the dollar on Friday, its highest level since early February.The BOJ has long targeted inflation at 2 per cent, and has guided short-term rates at -0.1 per cent and the 10-year bond yield around 0 per cent under a policy dubbed yield curve control .
Japan's Jiji news agency reported on Friday the BOJ is considering replacing YCC with a new quantitative framework that will show in advance how much bonds it will buy in the future. Fellow board member Hajime Takata also called for an overhaul of the BOJ's stimulus programme last week, saying that Japan was finally seeing prospects for durably achieving the bank's inflation target.