According to Jinshi Data, UBS Investment Bank pointed out that the latest rate hike by the Bank of Japan is unlikely to have much impact on the Japanese economy, and real interest rates remain low. The Bank of Japan has become more hawkish than expected and is eager to quickly normalize policy.
UBS raised its forecast for the Bank of Japan's policy rate at the end of 2024 from 0.25% to 0.50%, and expects the Bank of Japan to raise interest rates once in March and June 2025. In addition, UBS also adjusted its terminal interest rate forecast for the Bank of Japan from 1.5% to 1.0%.
Nozomi Moriya, Japan equity strategist at UBS, said Japanese stocks could see a rotation away from overseas demand-driven groups and large-cap stocks toward domestic demand-driven groups and small- and mid-cap stocks.