UBS: BOJ Rate Hike Seems Plausible in the Coming Months

BlockBeats News, October 21st, Masamichi Adachi, Chief Japan Economist at UBS Global Research, stated in a comment that it seems plausible for the Bank of Japan to raise interest rates in the coming months.

He mentioned that Japan's real interest rate is negative, making the financial environment very accommodative. The inflation dynamics seem to support the view that the central bank should reduce its accommodative policy, as it is expected that long-term inflation expectations will continue to rise towards 2.0%. He also expects the government to seek fiscal expansion, which could mean higher inflationary pressures. UBS expects the Bank of Japan to raise its policy rate by 25 basis points in January, but does not rule out the possibility of an increase in December. (FXStreet)