Japanese stocks fell and the yen rose Thursday after comments from Bank of Japan officials helped stir expectations the country could exit its decades-long negative interest-rate policy.
The yield on the 10-year Japanese bond BX:TMBMKJP-10Y jumped 11 basis points to 0.76%.
Bank of Japan Gov. Kazuo Ueda said Thursday that “there are extremely high uncertainties surrounding Japan’s economic activity and prices, including developments in overseas economic activity and prices, developments in commodity prices, and domestic firms’ wage- and price-setting behavior.”
The deputy governor, Ryozo Himino, on Wednesday spoke of the possibility of lifting rates. Done “properly,” he said there “would be a sufficient possibility of achieving a positive outcome from the exit, since a wide range of households and firms would benefit from the virtuous cycle between wages and prices.”
“We’ll have to see what happens at the next meeting, but in some respects this echoes what happened in markets last December 2022, when there was a late selloff at year-end after the major central banks remained hawkish, and the BoJ announced a surprise shift in its yield curve control policy, which was seen as paving the way for a potential end to their ultra-loose monetary policy,” said strategists at Deutsche Bank led by Henry Allen.