Record Break-Even Rate May Embolden BOJ to Raise Rates Further
- Real rate still negative, gap with global rates has not shrunk
- BOJ to raise rates as yen weakens - Nomura Securities
An indicator of investors’ inflationary expectations in Japan has risen to a record high, which could encourage the Bank of Japan to continue raising interest rates, analysts say.
The break-even inflation rate (BEI) exceeded 1.6% level on Jan. 27, following the BOJ’s additional interest rate hike to 0.5% and upward revision of its price forecast. The BEI is calculated by subtracting the yield on inflation-linked bonds from the yield on newly issued 10-year government bonds and Monday’s level marks its highest since 2004, when inflation-linked bonds were first issued, according to data compiled by Bloomberg.