Japan Weekly: BoJ still signalling room – and desire – to hike further

Governor Ueda delivered two messages in the press conference after yesterday’s policy meeting: first, the Bank of Japan thinks that policy normalisation is still on track and it intends to raise rates further; second, the Bank feels that it can afford to wait for more information, notably about wages, before it takes the next step. On that basis, we now think the next increase in the policy rate will come in March rather than at the meeting in January, since there won’t be much new information available by the middle of next month. But it is the Bank’s thinking on the extent of coming normalisation, rather than the timing of the next move, that will be more consequential over the coming year.