Watch the yen as Bank of Japan decides whether to signal exit from negative interest rates

And then there was the Bank of Japan. After last week’s flurry of central bank meetings, highlighted by the Federal Reserve’s surprise pivot toward easier policy next year, the BOJ will be eagerly watched early Tuesday for any sign it is ready to abandon its longstanding policy of negative interest rates and yield-curve control, an extraordinary program that has put a hard lid on how high long-term Japanese bond yields can rise.

Economists see virtually no chance the BOJ will move rates when it concludes its two-day policy meeting. But investors are on the lookout for any sign the world is about to lose its last remaining anchor to the extraordinary, ultraloose monetary policy settings that dominated the global financial system following the global financial crisis and during the COVID-19 pandemic. Bank of America economists Izumi Devalier, Shusuke Yamada, and Tomonobu Yamashita, in a note late last week, said that if, as they expect, the BOJ plans to end its negative interest-rate policy, or NIRP, early next year, it will likely offer a signal following Tuesday’s meeting either via its policy statement or in BOJ Gov. Kazuo Ueda’s post-meeting news conference. If the signal comes in the statem …

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