Is the BOJ’s cautious approach to rate hikes justified amidst Japan’s fragile economic recovery?

No December Hike Expected:

A Reuters poll shows 58% of economists expect the Bank of Japan (BOJ) to maintain its rate at 0.25% during the December meeting.

Focus Shifts to January:

Analysts anticipate clearer guidance in January following spring wage negotiations and updated U.S. policy under the incoming administration.

Inflation vs. Economic Fragility:

While inflation exceeds 2% and wages rise annually by 2.5%-3%, household spending remains weak, and factory output is inconsistent.

Potential Global Risks:

Economists cite concerns over U.S. President-elect Donald Trump’s proposed tariffs, which could negatively impact Japan’s trade-driven economy.

Uncertainty Looms:

With a fragile recovery, fluctuating forecasts on the next hike reflect uncertainty about whether Japan can withstand higher borrowing costs.