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2025-10-30 11:52:18
[Capital Economics Predicts Next Bank of Japan Rate Hike Delayed to January] 1. Capital Economics predicts the Bank of Japan's next rate hike will be delayed until January next year. This prediction is based on three core factors: the Bank of Japan's decision to maintain its current interest rate, its weak inflation expectations, and continued concerns about the impact of US tariffs. 2. Lack of Tightening Signals: The Bank of Japan's latest quarterly outlook report is virtually unchanged and does not suggest a return to tightening (rate hikes) before December this year. 3. Weak Inflation Outlook: The central bank still expects underlying inflation to remain "weak" and explicitly forecasts that the inflation rate will fall below 2% in the first half of next year. This provides a rationale for maintaining the current interest rate. 4. Continued Concerns about the Impact of Tariffs: Although the Bank of Japan no longer believes that tariffs will generally drag down global trade and market sentiment, its assessment of risks to economic activity remains "tilted to the downside." 5. A key internal concern is that tariffs may lead to a decline in corporate profits, forcing companies to focus on cost reduction, ultimately dragging down future wage growth. Sustainable wage growth is a core prerequisite for the Bank of Japan's decision to raise interest rates.
