"While BOJ Maintains Fixed Interest Rate Expectations, ECB Signals Continued Rate Cuts"
The Bank of Japan (BOJ) is set to announce its interest rate decision next week, amid ongoing speculation regarding the bank's stance. On the other hand, the European Central Bank (ECB), which implemented a 25 basis point rate cut yesterday, is expected to continue with rate reductions in upcoming meetings based on economic indicators.
BOJ likely to hold interest rates steady According to sources speaking to Reuters, the Bank of Japan (BOJ) is inclined to keep interest rates steady next week. This approach is based on the BOJ's strategy to gain more time by focusing on overseas risks and the wage outlook for next year. It has been noted that if uncertainties regarding wage increases are resolved in upcoming meetings in January or March, the possibility of a rate hike could be on the table.
There is currently no consensus among BOJ board members regarding the final decision. Some board members believe that Japan could have the economic conditions necessary to support a rate hike in December. The final decision will depend on the board members' confidence in Japan's ability to achieve sustainable price increases based on wages.
Possible rate cut signals from ECB The European Central Bank (ECB) may implement quarter-point rate cuts in January and possibly in March, as it assesses the current situation regarding inflation targets and economic growth. According to Bloomberg, officials who wished to remain unnamed stated that if the economy continues in line with current expectations, gradual reductions in borrowing costs would be appropriate.
Officials also mentioned that in emergency situations, a larger half-point cut could remain an option. However, they cautioned that such a move carries the risk of creating an undesirable sense of urgency.
No concrete decision has yet been made, and assessments will be based on current data at each meeting. Developments are expected to become clearer with Donald Trump's re-inauguration in January.