BOJ expected to keep rates on hold while signalling a hawkish stance, survey finds

What happened

A survey of economists indicates the Bank of Japan is expected to leave its policy rate unchanged at this week's meeting, while keeping a hawkish tone.

Every respondent in the survey said they expect the central bank to prepare the ground for a rate increase at one of its next meetings, pointing to continued rises in inflation and wages in Japan.

Why it matters

Bank of Japan decisions and the language around them feed directly into the yen, because interest rate differentials between Japan and other major economies are a central driver of the currency. A hold paired with hawkish guidance can shift expectations about the timing of future tightening, which in turn moves yen crosses and the dollar side of those pairs.

Japanese policy also matters beyond FX. Japan has long been a source of low-cost funding for positions in other assets, so changes in expected Japanese rates can affect global bond yields, equity indices and demand for assets such as gold that pay no yield.

What to watch

The focus is on the Bank of Japan's policy decision this week and the accompanying communication, including any signals about the timing of a future rate hike, alongside the inflation and wage trends cited by survey respondents.