TOKYO -- For the first time in about six years, money market players in Tokyo clearly expect short-term interest rates to move into positive territory.
Forward contracts on the one-year overnight index swap (OIS) rate -- a key gauge of monetary policy expectations -- indicate that the market sees short-term rates rising above zero as early as spring of 2023. This trend in OIS rates reflects an expectation that the Bank of Japan will reverse its negative interest rate policy next year. Many market participants believe pressure will continue to mount on Japan to follow monetary tightening in the U.S. and Europe.
