Jim Leaviss, Chief Investment Officer for Public Fixed Income at M&G, noted:
The market seems to be anticipating and pricing a change in yield curve control.
Barclays’ industry experts predict that the BoJ will scrap yield curve controls this week, after a disastrous start to the week. This is the final nail in the coffin for a difficult financial year.
Morgan Stanley analysts say that the BoJ has been actively working against interest rate increases over the past two year by keeping its policy at minus 0.1 despite 18 months where inflation was above its target.
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As the yen has weakened, the BoJ is under increasing pressure to tighten up its policy. The BoJ argues that the fastest-rising import tariffs have been the primary driver of price increases in countries worldwide, since the Covid-19 epidemic and Brexit.
The BoJ is likely to maintain a strong stance on an interest rate hike. They may also opt for a more sustainable wage increase in order to avoid the economy regressing back into decades of…