07:00 AM EDT, 09/20/2024 (MT Newswires) -- The Bank of Japan kept its policy rate at 0.25% overnight Thursday, noted Societe Generale.

At the press conference, in relation to the next rate hikes, Governor Kazuo Ueda said, "Current Japanese economy is on track. Nevertheless, accumulating uncertainties about the global economy, especially the US economy, and fluctuating market movement has caused some risks on our outlook. Hence, it will be difficult to move on to a rate hike as soon as the level of conviction of the outlook deepens."

Going forward, SocGen's main scenario for the United States economy is a soft landing. In addition, the BoJ currently doesn't see any major changes to the outlook presented in the Outlook Report.

As a consequence, SocGen estimates the next rate hike to be implemented at the December policy meeting.

Meanwhile, the bank forecasts rate hikes in April and September next year. However, the number of times the BoJ will be able to raise the policy rate next year will depend on the base pay rise in next spring's wage negotiations, the expected medium- to long-term inflation rate and the BoJ's view of the neutral rate.

Finally, the ruling party's LDP leadership election is to be held next Friday. It is highly likely that two of the group comprising former Environment Minister Shinjiro Koizumi, former Defence Minister Shigeru Ishiba, and Minister of State for Economic and Security Sanae Takaichi will remain on the final ballot, wrote the bank in a note to clients.

Koizumi and Ishiba basically support the normalization of the BoJ's monetary easing, stated SocGen.

However, if Takaichi is elected as the next LDP president and becomes the next prime minister, it is possible that the BoJ's additional rate hikes will be restricted to a certain extent, added the bank.