Economists: The Bank of Japan may pause its actions for a long time after raising interest rates this week
ChainCatcher News: Japanese government bond yields fell on Monday as traders prepared for potential volatility ahead of Trump's inauguration. The market could be impacted not only by Trump's inaugural speech but also by the approximately 100 executive orders he plans to implement on his first day in office. Bank of Japan policymakers will closely monitor Trump's actions and investor reactions, as they have strongly hinted that they will raise rates to 0.5% on Friday if there is no market volatility.However, Mizuho Securities' chief market economist Yasunari Ueno believes that a prolonged pause is likely after this week's rate hike, which is one reason for the continued low bond yields. Ueno stated that the Bank of Japan's view is that "the closer the policy rate is to 'neutral', the more necessary it is to adjust further in a more gradual manner." "Therefore, market participants may have ample reason to believe that the interval between this week's rate hike and further normalization measures will be longer than the approximately six-month interval between the rate hike in July last year and this week's hike, especially considering that the House of Councillors election will be held in July 2025." (Jin Shi)
