There is a rush of monetary policy decisions around the world this week! When will the BOJ negative interest rate policy be lifted? FOMC keeps hawkish predictions unchanged

Monetary policy meetings will be held around the world this week. Decision meetings will be held in many countries/regions, starting with the US Federal Open Market Committee (FOMC) on 19-20 and ending with the Bank of Japan meeting on 21-22.

According to Bloomberg's economist survey, in the September FOMC, the policy interest rate will remain unchanged at 5.25-5.5%, and this level will be maintained until interest rate cuts are made in May next year, showing a so-called “hawkish hold.” It is expected that another additional interest rate increase (0.25%) will be shown by the end of the year, but economists predict that the authorities will not actually raise such interest rates. The focus will be on the extent of the possibility of additional interest rate hikes by the end of the year and how much mitigation is expected next year.

In preparation for the Bank of Japan meeting on the 21st, there is growing interest in when negative interest rates will end, which Governor Kazuo Ueda suggested in an interview with the Yomiuri Shimbun. According to the Nihon Keizai Shimbun, deliberation committee member Tamura Naoki of the Bank of Japan stated that “cancellation of negative interest rates is also an option” if implementation of price targets is anticipated, and “around January to March 24” is listed as a guideline for the judgment period.

According to the Bloomberg survey, half of economists expect negative interest rates to be lifted in the first half of next year. Meanwhile, Managing Executive Officer Akiko Osawa, who oversees operations at Nippon Life Insurance, responded to an interview by the Nihon Keizai Shimbun and said, “(Cancellation) assumes 2025 in the main scenario” due to the need to determine situations such as wage increases and inflation. As for the view that it will be canceled within this year, “I have the impression that it has gone a little too far.” I'm talking to it.

On the 15th of the previous weekend, it was reported that there were voices within the Bank of Japan pointing out the gap between the content of Governor Ueda Kazuo's statement and market interpretation, and the dollar and yen updated the lowest price of yen this year. Mari Iwashita, chief market economist at Daiwa Securities, stated in the report that “as long as the exchange rate is included in the Bank of Japan's policy response function, explanatory power will be questioned at the Ueda Governor's meeting even if the status quo is maintained.” (Bloomberg)

Many central bank decisions will be announced in Europe on the 21st. Interest rate increases are expected in each bank due to deep-seated concerns about inflation due to high resources, etc.

Source: Bloomberg, Nihon Keizai Shimbun, Moomoo