Ella 
Following stronger-than-expected wage growth in Japan and Rengo, Japan’s largest union, proposing a 5.0% salary increase in the first phase of wage negotiations, expectations have increased that the Bank of Japan will raise policy interest rates this week.
The Bank of Japan is preparing to announce an interest rate decision around 11 o’clock Beijing time on Tuesday. According to market pricing, investors are divided on this event, with essentially half betting on the central bank exiting its negative interest rate policy. If the Bank of Japan raises interest rates by 10 basis points, from -0.1% to 0.0%, it will be Japan’s first interest rate hike since 2007.
A rate hike this week could push Japanese government bond yields and the Japanese yen (JPY) higher. If the Bank of Japan does not raise interest rates, traders will closely monitor the Bank of Japan’s hawkish comments signaling a shift in April, a move that may also increase demand for the yen.
