(Reuters) – The Bank of Japan kept interest rates steady on Thursday, as policymakers preferred to tread cautiously in pushing up borrowing costs amid uncertainty over U.S. president-elect Donald Trump’s economic plans.
As widely expected, the nine-member BOJ board decided to keep its short-term policy rate unchanged at 0.25%. But hawkish board member Naoki Tamura dissented and proposed raising interest rates to 0.5% on the view inflationary risks were building. His proposal was voted down.
QUOTES:
BART WAKABAYASHI, TOKYO BRANCH MANAGER, STATE STREET, TOKYO
“They probably want to wait till next year and want some more solid information coming in on the wage front from Japanese corporations – that’s going to be in March or April.
“As long as they can confirm wages will continue to increase… then they’ll have a bit more confidence to take the next step.
“I do think the BOJ is looking at the U.S. economy and how it will react to a new administration.”
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
“The Fed’s hawkish tilt and the BOJ’s pause could bring fresh reasons for yen traders to ‘carry’ on. The only thing in the way of new carry trades is heightened volatility – which means USDJPY could face a firm resistance at 160 if not before.
“There is some hawkish tilt in the decision – particularly one dissenter in favour of a hike and more signs of wage-price spiral intensifying. However, it remains unlikely that Ueda can clearly signal a January rate hike given the uncertainties around the Fed and Trump presidency.”
NAKA MATSUZAWA, CHIEF STRATEGIST, NOMURA SECURITIES, JAPAN
“So far, it’s no surprise here, but I guess yesterday’s FOMC result put the BOJ sort of in a corner where the BOJ cannot be too dovish so that they can keep the yen from falling. At the same time, actually they cannot be too hawkish either.
“So, the question is whether they can still retain market expectation for a hike in January, which has now almost come down to 50%. I think we have to depend on the governor’s presser later on, so that expectation’s not gonna be gone completely. Even the or
