Tokyo stocks are down ahead of the Bank of Japan’s rate decision, which will come this Friday, September 20, at the end of the central bank’s two-day meeting.
According to the consensus of analysts interviewed by CNBC, the BoJ led by Governor Kazuo Ueda will leave rates unchanged at 0.25%, before raising them at the December meeting.
All 53 economists surveyed by Bloomberg also believe that the Bank of Japan will hold rates; nearly 70% expect a new monetary tightening to be announced by December.
The prospect of further rate hikes, coupled with expectations of a rate cut by the Fed that could be as much as 50 basis points, is supporting the yen against the U.S. dollar.
And it is this strengthening of the yen that the Tokyo Stock Exchange is discounting, with the Nikkei index losing around 1.6% to 36,003.83 points.
The dollar-yen (USD-JPY) ratio is now unchanged, however, at around 140.52.
The Bank of Japan, it should be remembered, has put an end to the era of negative rates with an initial monetary tightening announced in mid-March, before raising rates again at record since 2008, also presenting the QT-Quantitative Tightening plan.