Majority of Bank of Japan Policy Board Expected to Support Rate Hike... "Decision After Trump's Inauguration"

More than half of the policy board members who decide the benchmark interest rate of the Bank of Japan (BOJ), Japan's central bank, are reportedly in favor of raising interest rates at the monetary policy meeting scheduled for next week.

Ueda, Governor of the Bank of Japan. Yonhap News Agency

According to foreign media including Nihon Keizai Shimbun (Nikkei), "If the BOJ executive board proposes to raise the interest rate to 0.5%, the majority of policy board members are expected to support it," adding, "While some members take a cautious stance, the likelihood of an interest rate hike being decided is high." If Japan’s policy rate is raised from the current 0.25% to 0.5%, it will be the highest level in about 17 years since October 2008.

Kazuo Ueda, Governor of the Bank of Japan, and Deputy Governor Ryozo Himino, along with seven other policy board members, will decide whether to raise the short-term policy interest rate at the monetary policy meeting on the 23rd and 24th. The decision will be made by majority vote, and if five or more members agree, the proposal will be approved.

The BOJ is reportedly planning to make a decision after observing the policy statements of the next U.S. President Donald Trump, who will take office on the 20th, and the subsequent domestic and international market reactions.

The Bank of Japan ended its negative interest rate policy in March last year by raising the short-term policy interest rate for the first time in 17 years, and after raising the rate from 0?0.1% to about 0.25% in July last year, it has been reviewing the timing for an additional increase. If an additional increase is made this time, it will be the third since the end of the negative interest rate policy in March last year and the first in half a year.

Earlier, Governor Ueda indicated the possibility of a rate hike by stating over two days on the 15th and 16th, "We will discuss and decide whether to raise interest rates at next week’s monetary policy meeting."