Nomura Executive Willcox: Expect Bank of Japan to raise rates by 25 basis points this week.

The head of the wholesale division of Nomura Holdings predicts that the Bank of Japan will raise interest rates this week, while also taking a "cautious stance" on further hikes. Christopher Willcox, head of trading and investment banking at Japan's largest brokerage, said in an interview on Tuesday that the central bank may raise the key interest rate by 25 basis points on Friday. In addition, "we will see a very slow but steady and cautious (rate hike)." Willcox said policymakers at the Bank of Japan will closely monitor Trump's inauguration to look for any disruptive actions and may not find anything that would prevent a rate hike this week. After Bank of Japan Governor Haruhiko Kuroda expressed confidence in wage increases, derivatives traders and economists predict the central bank will raise rates this week. Willcox expects the Bank of Japan to eventually raise the benchmark interest rate to 1%. However, he does not expect a repeat of the situation after the rate hike in July last year, when the Japanese stock market suffered a significant decline due to investors unwinding so-called yen carry trades. "They are cautious about disrupting the market," Willcox said. "When they start raising rates for the first time, the market usually has a significant impact." Willcox also said that Trump may take action on tariff issues before making efforts to improve government efficiency. He added that tariffs could initially cause inflation in the first year, but if efforts to improve government efficiency are successful, the impact of tariffs may be offset over time.