Nomura senses strong BOJ policy shift as rate hike expectations build

Dhwani Mehta FXStreet

Despite the Bank of Japan’s (BOJ) policymakers insisting on maintaining the monetary policy ultra-easy, Takenobu Nakashima, Chief Rates Strategist at Nomura Securities, said that markets could be in for a surprise rate hike announcement from the BOJ.

Key quotes

“Wariness continues to linger in markets about the BOJ doing some sort of policy tweak -- not just widening the band to allow for 10-year yields to move.”

“Speculation for a policy shift is particularly strong among foreign investors.”

“Traders likely remember that BOJ Governor Haruhiko Kuroda suddenly introduced a negative rate policy in 2016, despite having denied such a move was a possibility at the time.”

Meanwhile, the two-year forward overnight index swaps climbed to a high of 0.19% -- a gap of about 20 basis points above the current rate -- a sign of increased speculation that a shift in policy lies ahead, per Bloomberg.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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