The results of a survey of 30 economists conducted by Reuters from February 15 to 20 showed that more than 80% of respondents forecast the Bank of Japan to abandon the policy of negative interest rates at the April meeting, despite the fact that the Japanese economy is slipping into recession. Meanwhile, 76% of respondents believe that in April the Central Bank will also scrap yield curve control (YCC).
"The Bank of Japan may begin to act at the April meeting, based on the preliminary results of annual wage negotiations with the management of large firms and hearings of the heads of branches of the Bank of Japan on wage trends in small and medium-sized firms," said SMBC Nikko Securities.
Nearly every economist, 91% providing end-quarter rate forecasts, expects negative rate policy to be abandoned by end-year, up from 82% in January’s poll.
The survey also showed that 86% of respondents expect the Central Bank to end YCC (that was roughly in line with January's poll), while most of them believed that the Bank of Japan would take such a step in April. Overall, 18 out of 19 respondents said that ending negative rates and canceling YCC would happen simultaneously.
Regarding salary prospects, 97% of respondents expected average wage and base salary growth in the next fiscal year starting in April to exceed 3.58% in large Japanese firms. In January, 90% of respondents predicted an increase of more than 3.58%.