Institution: Bank of Japan expected to usher in the largest interest rate hike in 18 years

the market generally expects the Bank of Japan to raise its benchmark interest rate to 0.5% on Friday, with a 25 basis point increase that will be the largest since February 2007, further indicating signs that the Japanese economy is finally returning to normal. The two key points that Bank of Japan Governor Haruhiko Kuroda proposed last month to consider when raising interest rates have become clear. So far, the country's wage growth looks strong, and there have been no major market shocks in the first few days of U.S. President Trump's second term.

Earlier, insiders said that Bank of Japan officials believed that there was a high probability of a rate hike on Friday, unless Trump created too many negative surprises. Although Kuroda is unlikely to give any specific rate path to retain his options, overly dovish statements could soften the yen and exacerbate inflation pressures. This may also make monetary authorities highly vigilant about the possibility of direct intervention in the market. (Jinshi)