The Bank of Japan is expected to cut interest rates today or tomorrow as domestic pressure builds up and chaos increases worldwide.
Japan’s inflation expectations have risen again in the last three months, but 86.7% of households expect prices to rise within a year, according to a BOJ survey issued on Friday.
This is the highest number since June 2024, higher than the 85.7% figure in December. These expectations are one reason why central banks were leaning towards more hiking rather than cutting. But it’s not happening anymore – not now.
BOJ may need to cut fees by noon
– ZeroHedge (@zerohedge) April 11, 2025
The same survey shows that Japanese companies are finally beginning to raise wages and prices. Data shows that more interest rate hiking conditions are beginning to emerge.
Trump’s tariffs stall Voice’s hikes while inflation rises in Japan
However, analysts say another factor is getting in the way. Back in the White House, President Donald Trump has launched a new round of tariffs that rekindled the fears of a new recession.
That fear is one of the major reasons why BOJ is expected to cut its fees instead of hiking again.
And now, stocks and codes are all down thanks to Trump. Bitcoin is still struggling to get back $100,000, and the S&P 500 continues to wipe out trillions in almost every market session. Interestingly, however, the stock market actually performed a historic performance on Wednesday, the second-best day in history.
Meanwhile, Gold was breaking records amid the crash, but wobbled a bit after Trump hit China with the largest 125% tariff in history.
Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, explained that she is now pushing back forecasts for her next BOJ rate hike by the six months to January 2026.
BOJ had already begun to pull back its large bond buying program last year. The program funded the Japanese government over $10 billion a year. Now that these purchases have been cut, the Treasury is being forced to corner new buyers to close the gap, and they are looking for overseas to do so.
Foreign buyers are in inch while Boj cuts down bond purchases
BOJ has been away from quantitative easing since Ueda Kawada replaced Kuroda Haruhiko. Ueda announced that it will raise prices for the first time in 17 years and that the central bank will begin cutting bond holdings.
In July 2024, the bank said it would cut its bond purchases by 400 billion yen per quarter, cutting its total stock by about 7% to 8% by early 2026. These reductions focus primarily on bonds that are under ten years. Last month, BOJ said for the first time it would begin cutting back on ultra-long bond purchases. A full review has come in two months to see how the cuts are progressing.
Bond yields have reached levels not seen since the 2008 financial crash, which has attracted new attention. But if the Bank of Japan cuts interest rates soon, it will almost certainly bring much-needed relief rally to stocks, bonds, crypto and gold.
