06:41 AM EST, 11/11/2024 (MT Newswires) -- The Japanese rate market is less confident that the Bank of Japan will hike the rate again this year, said MUFG.

The release of the minutes from the BoJ's latest policy meeting in October was released overnight Sunday and provided no clear indication that it's considering raising rates again as soon as the next policy meeting in December, wrote the bank in a note to clients.

It fits with MUFG's updated forecast for the BoJ to deliver its next rate hike in January rather than December. The BoJ did emphasize though that it's important to communicate effectively its core message that "if the outlook for economic activity and prices will be realized, they will continue to raise the policy rate accordingly."

One board member noted that "with monetary policies of the BoJ and Fed moving in opposite directions, the markets, particularly foreign exchange markets, could see large fluctuations."

While the minutes don't rule out another rate hike as soon as December, the yen would likely have to weaken sharply heading into year-end to force the BoJ to bring forward rate hike plans, stated the bank.

One reason why MUFG delayed its forecast for the next BoJ hike to January has been political uncertainty in Japan after the ruling government lost its majority in the Lower House. Prime Minister Shigeru Ishiba won a runoff vote in the final round of the Lower House ballot overnight securing 221 votes compared with 160 for opposition party leader Yoshiko Noda.

The LDP and Komeito are expected to continue as a minority government with support from the DPP, added the bank.