BOJ seen ending negative rates in April, keep hiking next year

  • BOJ dismantled YCC in October, laying groundwork for next move
  • Service prices already rising, BOJ just waiting for evidence
  • BOJ must keep hiking once short-term rates at zero

Headlines via Reuters. Hayakawa spoke with Reuters in an interview.


While the BOJ maintains its 0% target for the 10-year bond yield under YCC, Hayakawa said the bank "effectively dismantled" the framework in October by re-defining what was a rigid 1% cap for the yield to a loose reference.

  • As the next step, the BOJ will likely raise short-term rates to around zero from -0.1% in April, when more data becomes available on next year's spring wage negotiations, he said.

"Service prices are already rising and prospects of seeing solid wage growth next year are heightening. But the evidence (on wage growth) isn't available yet"

  • "The BOJ is just waiting for more evidence" that inflation will sustainably hit 2%, Hayakawa said. "Once that's available, BOJ will end negative rates."

More here:


Hideo Hayakawa is a Senior Fellow at Tokyo Foundation for Policy Research and a former Bank of Japan Executive Director. He joined the Bank of Japan in 1977 and served as an Executive Director in 2009–13.

  • During his career at the BOJ, he served in many research-related positions in the Research and Statistics Department and the Institute for Monetary and Economic Studies, including Director General of the Research and Statistics Department in 2001–07.
boj Bank of Japan 31 October 2023

If Hayakawa is on the right track this is positive for yen at the margin.