MNI BoJ Preview - March 2025: Policy Steady
Mar-18 00:37By: Gavin Stacey
Japan
EXECUTIVE SUMMARY:
- The Bank of Japan (BoJ) is expected to keep its policy rate at 0.50% in March, with no urgency for another hike after its January increase.
- Strong Shunto wage negotiations saw a 5.5% rise, but broader wage pass-through is needed for sustained inflation above 2%.
- Analysts expect a gradual rate hike to 0.75% by July or September and 1.0% by early 2026, depending on SME wage trends.
- Market pricing reflects uncertainty, with only half of a 25bps hike factored in for June and a full hike not priced until December.
- A July hike remains the base case, but a weak yen or inflation risks could accelerate the timeline, while political instability may delay it.
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