Over 90% of market players expect BOJ to keep rates steady this week, survey shows

TOKYO (Reuters) – Over 90% of market participants expect the Bank of Japan to keep interest rates steady at this week’s policy meeting, a survey by money market brokerage Ueda Yagi Tanshi showed on Tuesday.

The survey was conducted on Dec. 12-16 targeting 150 banks, securities firms, insurers and other financial institutions, ahead of the central bank’s two-day meeting ending on Thursday.

Of the total, 91% said they expect the central bank to keep short-term interest rates unchanged at 0.25% this week.

But 95% of the respondents expect the overnight call rate, which the BOJ sets as its policy target, to rise three months from now, up from 67% in the previous survey in October.

The BOJ ended negative interest rates in March and raised its short-term policy target to 0.25% in July. It has signaled readiness to hike again if wages and prices move as projected and heighten conviction Japan will durably hit 2% inflation.

The central bank has been guarded on the timing of the next rate hike, causing market expectations of a move to fluctuate between December and January.

Sources have told Reuters the BOJ is leaning toward keeping interest rates steady in December as policymakers prefer to spend more time scrutinising overseas risks and clues on next year’s wage outlook.

A majority of economists polled by Reuters on Dec. 4-11 expect the BOJ to keep interest rates steady this month, a shift from the November’s poll that showed a slim majority projecting an interest rate hike.