(Bloomberg) -- Investors wagering on a drop in interest rates this year may be disappointed, according to the head of the investment-banking unit at Nomura Holdings Inc.

“Central banks are going to remain vigilant for longer,” Christopher Willcox, head of Tokyo-based Nomura’s wholesale division, said in an interview on Bloomberg TV at the World Economic Forum in Davos. “They were shocked by this inflation move and I think they are going to make sure that it’s under control before they move forward. Our view on the market is perhaps that interest-rate cuts come a little bit later and that there are probably fewer of them in 2024.”

Policymakers at numerous central banks jacked up rates to combat inflation that swept in after the Covid pandemic, upending global markets in the process. Investors are now speculating on when they will begin to reverse course.

“We’ve had a year of inflation-fighting from the central banks and they seem to have got that under control, and we’ve had a disinflationary move for the last few months,” said Willcox, whose division spans trading as well as managing stock and bond sales and advising on mergers and acquisitions. “That’s led, I think, to a broad consensus of a soft landing across the US and in the developed markets. Clients broadly are going to be focused on whether that comes to pass or not.”

Willcox’s outlook contrasts with the average forecast of analysts surveyed by Bloomberg, who predict that the Federal Reserve, the Bank of England and the European Central Bank will all start cutting interest rates soon. In the case of the US central bank, analysts expect the current rate to fall from its current 22-year high of 5.5% to 4.3% by the end of 2024. 

The Fed’s Christopher Waller added to the speculation earlier Tuesday, suggesting that the central bank may cut interest rates this year, absent a rebound in inflation. In prepared remarks at a virtual event hosted by the Brookings Institution, he also emphasized the need to be methodical and careful with the pace of easing. 

Nomura’s wholesale division generates much of its revenue from rates trading, the buying and selling of government bonds and other products tied to interest rates where profits can be made or lost on a central banker’s decision. Willcox led similar businesses at JPMorgan Chase & Co. before joining the Japanese bank in 2021, replacing Steve Ashley as head of the unit the following year. 

The Bank of Japan’s steps toward loosening its grip on bond yields over recent quarters have helped enliven the fixed income market in Nomura’s home country. Both Morgan Stanley and Barclays Plc are pointing to a trading boom in the world’s third-biggest economy as the central bank weighs a landmark shift in monetary policy. Willcox echoed that view. 

“It’s quite possible that we see them move away from the negative interest rate policy that they’ve had some time in the first half of this year, possibly as soon as April, and also perhaps move away from yield curve control as well,” Willcox said. “Having said that, we don’t expect them to then go into a hiking cycle any time soon. I think they’re determined to get a virtuous circle going between wages and prices.”

The resurgence in Japan sets the market apart from much of the rest of the world, with muted trader bonuses expected on Wall Street after revenues dipped compared to last year. 

Willcox’s boss, Chief Executive Officer Kentaro Okuda, is trying to revitalize Nomura after profit fell in his first three years in office, weighed by overseas losses — including a hit of almost $3 billion on the collapse of investment firm Archegos Capital Management in 2021. The company has taken a slew of steps to improve results abroad, from expanding in the $1.6 trillion global private lending market to hiring traders in the Middle East while cutting jobs in China. 

After the collapse of Archegos, Okuda announced an overhaul of Nomura’s risk management and formed a new unit to help manage threats to the bank. The firm scaled back its prime-brokerage business and replaced some executives involved in the affair. 

“I think we can say we’ve put Archegos behind us,” said Wilcox, citing a three-year program to rebuild Nomura’s risk and control processes. “It’s been vetted by regulators, and I think we can say that we’ve made enormous improvements in terms of how we do that.” 

--With assistance from Takashi Nakamichi.

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