The Bank of Japan Sends Subtle Signal, Avoids Committing to Rate Hike Ahead of April Meeting

BlockBeats News, April 6th, the Bank of Japan avoided fueling market expectations of a rate hike this month by sending subtle signals in its two quarterly regional economic reports. The Bank of Japan, in another news release summarizing the views of each branch manager, stated that looking ahead, amid increasing uncertainty, concerns about price increases, especially energy price hikes, and their negative impact on corporate profits and private consumption are growing.

This commentary suggests that the Bank of Japan is unwilling to commit to a rate hike so close to the next interest rate decision on April 28th. According to pricing in the overnight indexed swap market, as of Monday, traders saw about a 66% chance of a rate hike this month, as the Iran conflict could bring greater inflationary risks to Japan in an environment of already elevated inflation. The Bank of Japan also stated that many reports indicate that businesses continue to pass on cost increases such as labor and logistics costs to selling prices. Meanwhile, companies are responding to consumer inflation fatigue by limiting the magnitude of price increases and strengthening their lineup of low-priced products. (FOREX)