Organization: The Bank of Japan is expected to have its largest interest rate hike in 18 years

Odaily Planet Daily reports that the market widely expects the Bank of Japan to raise its benchmark interest rate to 0.5% on Friday, which would be the largest increase since February 2007, further indicating signs of a return to normal for the Japanese economy. The two key points proposed by Kazuo Ueda, Governor of the Bank of Japan last month when considering raising interest rates are now clear. So far, wage growth in Japan appears strong and there have been no major market shocks in the early days of US President Trump's second term.

Informed sources said earlier that officials at the Bank of Japan believe there is a high probability that they will raise interest rates on Friday unless Trump creates too many negative surprises. Although it is unlikely that Ueda will provide any specific path for interest rates in order to preserve his options, overly dovish statements could lead to a weakening yen and exacerbate inflationary pressures. This may also keep monetary authorities highly vigilant about possible direct intervention in markets.