FILE PHOTO: People walk in front of the Bank of Japan building in Tokyo, Japan January 23, 2024. REUTERS/Kim Kyung-Hoon/File Photo
While a majority of economists polled earlier this month had expected the BOJ to wait until April for it to end negative rates, sources say bigger-than-expected pay hikes announced by major firms last week now heighten the chance the bank will make that decision at its two-day meeting ending on Tuesday.
"This would be the first rate hike in 17 years, so it has a lot of symbolic significance. But the actual impact on the economy is very small," she said, noting the BOJ will likely maintain its resolve to keep monetary conditions ultra-loose. A poll taken in March showed 35 per cent of economists expected the BOJ to end negative rates at the two-day meeting ending on Tuesday, up from the previous month's 7 per cent but still below 62 per cent projecting such action at its subsequent meeting on April 25-26.
An end to the world's last remaining provider of cheap funds could also jolt global financial markets as Japanese investors, who amassed overseas investments in search of yields, shift money back to their home country. Under previous Governor Kuroda, the BOJ deployed a huge asset-buying programme in 2013, originally aimed at firing up inflation to a 2 per cent target within roughly two years.
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