Speculation surged that the Bank of Japan will move this month to raise interest rates for the first time since 2007, after a flurry of reports and wage figures helped drive up the yen, bond yields and overnight swaps.
Bets on the March 18-19 meeting are gaining traction as reports emerge that some BOJ officials favor an early move while some government officials also support a rate hike. Economists and investors are largely in agreement that the central bank will scrap the world¡¯s last remaining negative rate either this month or in April.
The yen rallied more than 1% to a one-month high against the dollar Thursday, while Japanese bank shares and government bond yields rose after the wage data and remarks from a BOJ board member who expressed confidence in inflation. Meanwhile, labor unions made the strongest pay demands in three decades. Volatile overnight swaps put the chance of a March rate hike at nearly 80%.
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