The Japanese yen has risen sharply in the short term! Report: Unless Trump causes market turmoil, the likelihood of the Bank of Japan raising interest rates in January is very high

Officials from the Bank of Japan believe that Japan's economy, inflation, and wage growth support further interest rate hikes, and unless Trump's inauguration causes market turmoil, they are likely to raise rates at the meeting on January 24.

On Thursday, media reports citing informed sources indicated that as long as Trump's entry into the White House does not trigger too many negative surprises, the Bank of Japan sees a high possibility of a rate hike in January.

Informed sources stated that Bank of Japan officials acknowledged that unless Trump disrupts the market or changes expectations for the global economy at the beginning of his term, the central bank is very likely to raise rates from 0.25% at the end of the two-day meeting on January 24.

Informed sources noted that while Bank of Japan officials hope for a smooth start to Trump's second term, they need to remain vigilant about any risks. Informed sources stated that the central bank will make its final policy conclusion after reviewing economic data, market conditions, and the impact of U.S. economic policies at the last moment.

Following the news, the yen strengthened against the dollar in the short term, and the gains in the Japanese stock market narrowed. The yen has risen against the dollar for two consecutive days, reaching its highest level since mid-December on Thursday.

Bank of Japan Governor Kazuo Ueda and one of his deputies, Norihiro Nishida, stated that they will decide in January whether a rate hike is necessary, which largely supports market expectations for a rate hike this month.

Informed sources said that officials believe Japan's economy and inflation will continue to align closely with their forecasts, which enhances their confidence that the central bank's economic outlook will achieve its stable 2% inflation target.

Ueda has repeatedly stated that if price and economic trends align with the Bank of Japan's economic outlook, the central bank will adjust the degree of monetary easing. Informed sources indicated that officials believe the Bank of Japan's inflation forecasts for this fiscal year and next year (excluding fresh food and energy) may be revised upward, providing support for a rate hike at the meeting.

Additionally, since the last meeting in December, officials have become more confident about wage increases, especially following the meeting of branch managers of the Bank of Japan earlier this month.

Informed sources stated that the annual spring wage negotiations may yield solid results similar to last year, as Japanese companies increasingly view wage increases as a given. Ueda noted that, aside from the U.S. economic outlook, wage growth momentum is one of the two key points to closely monitor when determining the timing of raising borrowing costs