Bank of Japan May Wait at Least Until March for Potential Rate Hike: BofA

Investing.com -- The Bank of Japan (BoJ) has decided to maintain its unsecured overnight call rate target at 0.25%. This decision was anticipated by 56% of analysts surveyed by Bloomberg, including those from BofA.

During today's meeting, the policy committee voted 8 to 1 in favor of maintaining the current rate. The dissenting vote came from committee member Naoki Tamura, who proposed a 25 basis point increase. Tamura noted that the current economic conditions and price trends are in line with the Bank's expectations, indicating a higher risk of price increases.

Nonetheless, there were no significant changes to BoJ's policy statement. The Bank's assessment of the current economic conditions, outlook, and risk factors largely remained similar to what was outlined in the October Outlook Report.

In the press conference following the meeting, Governor Ueda exhibited a distinctly dovish stance. When asked why the policy committee preferred to maintain the current rate despite recent domestic data aligning with BoJ's expectations, Ueda pointed to two main factors.

First, he expressed the need to gather more information about the potential for wage increases in the fiscal year 2025. Secondly, he highlighted the ongoing uncertainties regarding the outlook of overseas economies, particularly in the United States.

"Ueda's remarks today provide a stronger indication that the central bank may need to wait until at least the March Monetary Policy Meeting to gather sufficient information for making a decision on interest rate hikes," said BofA economist Izumi Devalier in a note.