Sources: Some Bank of Japan officials believe that the timing of interest rate hikes may be earlier than market expectations

ChainCatcher reports that, according to sources, some Bank of Japan policymakers believe that the possibility of an interest rate hike may come earlier than market expectations, with a high likelihood of a rate increase in April, as the continued depreciation of the yen could exacerbate the already expanded inflationary pressures. BOJ policymakers are facing a daunting task: raising decades-long ultra-low borrowing costs amid increasing global headwinds that are putting pressure on growth, just as the Japanese economy begins to recover from a prolonged deflationary impact.

The central bank just raised interest rates to a thirty-year high in December and is expected to keep rates unchanged at the January meeting. However, sources say many BOJ policymakers believe there is room for further rate hikes, with some not ruling out the possibility of taking action in April, which would be earlier than the mainstream market expectation (i.e., a rate hike occurring in the second half of this year). Sources indicate that if sufficient evidence emerges showing Japan will continue to achieve its 2% inflation target, some within the BOJ may consider an early move.