Political vacuum won’t deter year-end rate hike

It now looks likely that the existing LDP/Komeito coalition will remain in power via a partial alliance with the Democratic Party for the People. While there's a risk that the DPP demands policy changes that could delay its passage, we expect a supplementary budget to have been approved by the time of the Bank of Japan's next meeting on 19th December. Indeed, with BoJ Governor Ueda sounding more optimistic this week, we're sticking to our forecast of another rate hike at that meeting.