Sources: Some Bank of Japan officials believe there is room for an earlier rate hike

Deep Tide TechFlow News, January 16 — According to sources, some Japanese central bank policymakers believe that the possibility of an interest rate hike may come earlier than market expectations, with a high likelihood of a rate increase in April, as the continued depreciation of the yen could exacerbate the already expanded inflationary pressures. Japanese central bank policymakers are facing a daunting task: raising the ultra-low borrowing costs that have persisted for years amid increasing global headwinds and growth pressures, just as the Japanese economy is beginning to recover from a prolonged deflationary impact.

The central bank just raised interest rates to a thirty-year high in December and is expected to keep rates unchanged at the January meeting. However, sources say many Japanese central bank policymakers believe there is room for further rate hikes, with some not ruling out the possibility of taking action in April, which would be earlier than the mainstream market expectation (i.e., rate hikes will occur in the second half of this year). The sources indicated that if there is sufficient evidence that Japan will continue to achieve its 2% inflation target, some within the Bank of Japan may consider taking preemptive action. (Jin10)