Some Bank of Japan policymakers see scope to raise interest rates sooner than markets expect, with April a distinct possibility, as a sliding yen risks adding to already broadening inflationary pressure, four sources familiar with its thinking said.
BOJ policymakers are facing the unenviable task of pushing up years of ultra-low borrowing costs even as rising global headwinds weigh on growth in an economy that has only recently started to shake off the effects of chronic deflation.
Having just raised interest rates to a 30-year high of 0.75% in Dec., the central bank is set to keep borrowing costs steady at its two-day policy meeting ending on Jan. 23.
But many BOJ policymakers see scope for further rate hikes with some not ruling out the chance of action in April, the sources said, which would be earlier than dominant private-sector views centered on monetary tightening occurring in the second half of this year.
Analysts polled by Reuters expect the BOJ to wait until July before raising rates again, with more than 75% of them expecting it to climb to 1% or higher by September.
