The Bank of Japan will hold a policy meeting on 30th-31st October. Will there be a rate hike this time?

Last time Japan raised rates, the global markets suffered. Will there be a rate hike this time?

The following is an excerpt from reports by Fuxing Network.

In its October World Economic Outlook (WEO) report, the IMF estimated that due to supply disruptions in the automotive industry and the waning one-time boost from a surge in tourism, Japan's economic growth rate is expected to slow from 1.7% in 2023 to 0.3%, a significant downward adjustment of 0.4 percentage points compared to the 0.7% estimate made in July. "With the strengthening of real wage growth, private consumption will drive economic growth, and the economy may grow by 1.1% in 2025."

The IMF's valuation assumption is based on the Bank of Japan maintaining a stable monetary policy path. "It is expected that the policy interest rate will gradually rise towards a neutral level of around 1.5% in the medium term."

Due to stable wage increases supporting consumer spending, Japan's second-quarter GDP annualized rate was 2.9%, despite weak demand from China and slowing economic growth in the United States casting a shadow over the outlook for this export-dependent country.

Bank of Japan Governor Kazuo Ueda stated that if economic and price developments align with its valuations, the central bank is prepared to raise rates further.

In the quarterly valuation released in July, the Bank of Japan projected that the Japanese economy would grow by 0.6% in the fiscal year 2024 and accelerate to 1.0% in the fiscal year 2025. The central bank will hold its next policy meeting on 30th-31st October, at which it will update its valuations.