The market has raised the probability that the Bank of Japan will raise interest rates at its September 18 meeting to 82%, up from just 23% before the July meeting. Senior BOJ officials are scheduled to deliver several speeches before the meeting, which will be watched for signals supporting or opposing this rate hike. Deputy Governor Ryozo Himino is due to speak this Thursday, while Governor Kazuo Ueda may comment after the G20 meeting in the United States next week. BOJ board members Hajime Takata and Kazuyuki Masu will speak on September 2 and September 10 respectively. Kento Minami, senior economist at Daiwa Securities, believes the BOJ may not explicitly say it will raise rates, but will emphasize upside inflation risks, which the market will interpret as opening the door for a rate hike next month. A key support comes from the United States and Japan jointly intervening in currency markets in late July for the first time since 1998, helping pull the yen back from levels near 160 yen per dollar. US Treasury Secretary Scott Bessent said monetary policy needs to follow through on the currency intervention measures, and expressed confidence that the BOJ will take necessary action.
Daiwa Securities Group Inc.Daiwa economist quoted; rate hike may boost trading activity.
Higher probability of BOJ rate hike leads to higher yields.
BOJ rate hike expectations strengthen JPY against USD.
