Sliding Yen, Robust Economy Give BOJ More Grounds for Early Hike

Bloomberg··Read original
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Summary · why it matters

The Bank of Japan has an increasingly strong case to consider an early rate hike as business activity remains robust and the tumbling yen threatens to spur inflation above its price target. Markets now price a solid chance—over 60%—that another increase could come by October, sooner than the December move economists had generally expected. The central bank's Tankan survey showed business confidence improving in June to the highest in eight years, and firms' longer-term inflation expectations rose to a record 2.6%. Prime Minister Sanae Takaichi's signaling of a preference for prolonged monetary easing has helped push the yen to its weakest against the dollar since 1986, adding to inflationary pressure and increasing the likelihood the BOJ will need to raise rates sooner.

Impact on assets 4

Financials± Mixed
Bank of Japan
8301
± MixedMonetaryrelevance

BOJ is the subject; article discusses its policy stance but not a direct impact on the institution itself.

BNP Paribas SA
BNP
▼ NegativeMonetaryrelevance

BNP Paribas has exposure to yen; yen strengthening could hurt its FX-related earnings, but impact is indirect.

Others▼