Bank of Japan prepares to hold last 2023 meeting, Will it hold surprises?

Markets now await Bank of Japan's last policy meeting of the year amid speculation the BOJ might exit the current cycle of policy tightening soon. 

Such speculation increased after a batch of data showed mounting inflationary pressures on Japanese policymakers, and after bullish remarks by BOJ Governor Kazuo Ueda. 

Markets expect Bank of Japan to maintain its ultra-easy policies unchanged, but surprises could definitely happen. 

Ueda

Bank of Japan Governor Kazuo Ueda said last week there are considerations that might bring interest rates away from negative zones. 

Such remarks came at the same day when Ueda met Japan's Prime Minister Kishida, hinting at a potential political change in dealing with the economy. 

Analysts now expect the BOJ to get rid of the current ultra-easy policies gradually, in turn sending yen to multi-month highs. 

Ueda said the central bank will get enough data by the end of the year to gauge whether it should maintain negative rates. 

Estimates 

City Index analysts said in a memo that Uedo put the foundations for exiting ultra-easy policies and negative interest rates in the near future.

National Australia Bank analysts believe the next BOJ policy meeting will be crucial in gauging the likely path ahead for monetary policies. 

No surprises are expected at this meeting, however it may lay the foundation for important policy revision in 2024.