Japan's Rate Hike Expectations Decline Amid Geopolitical Uncertainty

On April 16, according to Jin10, Daiwa Securities economists noted that due to geopolitical uncertainties, market expectations for an immediate rate hike by the Bank of Japan have decreased. This shift makes it easier for the Bank of Japan to justify maintaining its current interest rates. Currently, the overnight index swap market estimates a 26% probability of a rate hike by the Bank of Japan in April, down from approximately 60% last week. Japan's economy has shown some resilience against the adverse effects of deteriorating trade conditions. The current monetary policy is at a stage where a comprehensive assessment is required, with careful consideration of potential inflation trends and external shocks.