Source: Insider Source: Insider Anonymous Source: Bank of Japan to Commit to Further Rate Hike at Next Week's Policy Meeting

December 12 — The Bank of Japan (BOJ) could reaffirm its commitment to further rate hikes next week but stress that the pace of future increases will hinge on how the economy responds to each move, according to three sources. BOJ Governor Haruhiko Kuroda has effectively already signaled a December rate hike, and markets have nearly fully priced in a 25-basis-point increase (from 0.5% to 0.75%) for the month. Attention now turns to how far the BOJ can raise rates to reach a neutral level. Sources note the central bank may internally update its estimate of how far its policy rate is from its perceived neutral level, but it won’t use this estimate as a primary tool to communicate future rate paths—due to the challenge of making precise predictions. Instead, the BOJ will explain that future rate decisions will depend on how past hikes have impacted bank lending, corporate financing conditions, and other economic activity, sources say. One source added: “Japan’s real interest rates are very low, so the BOJ can keep hiking in stages.” The other two sources share this view. (Kin Summit)