State Street Global Advisors says the Bank of Japan may adopt a cautious stance
after raising its policy rate to 1.25%. Economist Krishna Bhimavarapu warns
that, while policy can be adjusted at any meeting, weak household consumption
and relatively moderate inflation make Governor Ueda likely to avoid committing
to a clear path of further hikes. Strategist Masahiko Loo expects Ueda to remain
neutral-lean-hawkish, noting growth resilience, ongoing inflation risks and an
still-easy real policy rate support further policy normalization. Market focus
is shifting from whether the BOJ will hike again to where the terminal rate will
be.
