The Bank of Japan sends subtle signals to avoid committing to a rate hike before the April meeting

BlockBeats message. On April 6, the Bank of Japan, in its two quarterly regional economic reports, avoided fueling market expectations for the possibility of a rate hike this month by sending highly subtle signals. In another news release summarizing the views of the heads of its branches, the Bank of Japan said that looking ahead, amid rising uncertainty, people are concerned about price increases—especially increases in energy prices—and their negative impact on corporate profits and private consumption.

These remarks indicate that the Bank of Japan is not willing to commit to a rate hike just three weeks ahead of its next interest rate decision on April 28. Based on pricing in the overnight swap market, as of Monday, traders estimated the likelihood of a rate hike this month at about 66%, because the Iran war could pose greater upside inflation risks to Japan in a situation where inflation is already staying elevated. The Bank of Japan also said that many reports indicate that companies continue to pass along rising costs such as labor and logistics expenses to sales prices. At the same time, companies continue to cope with consumers’ inflation fatigue by limiting the amount of price increases and strengthening their lineup of low-priced products. (JIN10)