With the fed cut still fresh in the markets, the Bank of Japan (Boxwoodfor its acronym in English) will announce this midnight the course of its monetary policy. Although the consensus of analysts expects remains at 0.5%the decision will be known in a context of strong tensions, both at the political level; with the resignation of the prime minister, Shigeru ishiba; as economic, with the Increased inflation and the impact of US tariffs.
If the monetary authority decides to raise rates, could cause a cimbronazo in global financial markets, especially in emergingaccording to analysts. The analyst of Personal Investor Portfolio (PPI) Martin Cordeviola held in dialogue with Scope That “an eventual increase in rates in Japan is relevant to the rest of the world for two reasons, both linked to flows.”
First, he explained that “Japan is the second largest emitter of sovereign debt globally; If investors reduce exposure to JGBS (Japan debt bonds), These funds could be reoriented towards other bonds with a better risk/return relationship, such as US treasuries“
Secondly, he remarked that “the ultrabajas rates of the BOJ have historically financed positions leverage in Equity Global.” Therefore, “If the anchonient cost of these strategies goes up, it would be bad news for the actions“
Rates: doubts compared to October
A recent Reuters survey showed that Most economists foresee an increase of 25 basic points for the end of the year. However, there was no consensus as to the moment, with the bets centered in October and January.
In this sense, Cordeviola stressed that “Some members of the BOJ warned that an adjustment is even possible in the midst of recent political instabilitymarked by the resignation of Fumio Kishida (in 2024) and the succession of prime ministers in a few years, which subtracted predictability to the economic direction. “
Consulted by Scopethe Research Strategy of Pepperstone, Dilin WuHe argued that “although the market has discounted a possible rise in types of the Bank of Japan in October,” he considered that There are “scarce chances of this happening”.
And he argued “While inflation remains stable and wages show a certain bullish impulse, which creates a macroeconomic context favorable to adjustment (of rates), Political uncertainty and pressures on corporate gains hinders a rise in October“
Takaichi: Japan’s new prime minister?
Wu argued that “if Sanae Takaichi, currently leader in approval indices, becomes prime minister, His ‘dovish’ position would significantly raise the level of demand for any decision of the Bank of Japan. “
Takaichi is the main candidate to win the primary elections of the ruler Democratic Liberal Party (PLD) on October 4. In addition to its open opposition to the rates of the BOJ, it stands out for His initiatives to increase spending to boost the Japanese economy.
“Even a more moderate candidate who assumes the position would not facilitate things: That the Central Bank increases interest rates just after the new prime minister assumes the position would continue to be a complicated task, “Wu told this medium.
Tariffs, inflation and salaries
The PPI analyst explained that “in recent months, there is an acceleration of inflation, which today runs to 3.1% year -on -year, above the 2% target.” In this regard, he stressed that “local inflationary dynamics also have its own characteristics.” And he explained: “After decades of very low inflation or deflation, Any price shock tends to move more strongly to wages and contracts“
Meanwhile, Wu emphasized that “although US tariffs on Japanese cars have fallen from 27% to 15%, Export -oriented companies continue to face pressures on costswhich often absorb by reducing gain or salary moderation. “For that reason, “The uncertainty about salary growth keeps the cautious boxwood”.
The impact on global markets
Despite her skepticism, the Pepperstone economist said that if that rise in rates, “global repercussions could be substantial,” because the Bank of Japan “I could exercise one of the most powerful levers for global capital flows this year”.
Considered that “Since the markets already discount a possible flexibility of the Feda rise in types by the Bank of Japan would reduce the interest rates between Japan and the US, which would probably press the dollar and would generate capital flows back to Japan “.
Therefore, that “could affect the yields of American treasure bonds and reconfigure the risk premiums, especially in the short and a half sections of the curve. “
Consulted on emerging markets, including Argentina, Wu said that “these economies could be the most vulnerable”. And he deepened: “If Japan is consolidated as a destination of ‘safe performance and refuge and the dollar does not depreciate significantly in the face of emerging market currencies, the flow of return funds to Japan would expand global differentials and differentials and would withdraw the speculative capital of emerging markets“
Source: Ambito
