Japanese shares have been under pressure after the BOJ said it may end its zero interest rate policy at the start of 2024.
JPN 225: Daily Chart
The price of the Nikkei fell for a third day on Monday but was able to rebound. There is still a downward risk to the 32,300 level.
Last week saw a slide in global stock indices on economic fears. The Nikkei also dropped as the governor of the Bank of Japan (BoJ), Kazuo Ueda, said the country’s negative rate policy could be ended by the start of 2024 if wage inflation remains high.
“Once we’re convinced Japan will see sustained rises in inflation accompanied by wage growth, there are various options we can take,” Ueda was quoted as saying.
“If we judge that Japan can achieve its inflation target even after ending negative rates, we’ll do so,” he added.
With inflation exceeding the bank’s 2% target for more than a year, markets have speculated that the BOJ will soon start raising interest rates. But Ueda maintained his support for the ultra-loose policy until the BOJ was sure inflation would remain higher.
Ueda said in the interview that the BOJ will “patiently” maintain an ultra-loose policy for the time being.
The news sent the Japanese yen soaring after a poor performance against the US dollar due to an aggressive Federal Reserve. Higher inflation in the coming readings could have a negative effect on the Nikkei.
