From CNBC · Lisa Kim · · 1m 10s
BOJ seen lifting rates to 1.25%
Economists expect Japan’s central bank to speed up rate hikes as inflation, wages and U.S. pressure reshape the call.
In brief
Economists expect Japan’s central bank to speed up rate hikes as inflation, wages and U.S. pressure reshape the call. Markets are bracing for a faster BOJ tightening cycle, but the yen may still struggle to strengthen much beyond 150. Originally reported by CNBC.
Rates may rise Friday
Most surveyed economists expect the BOJ to lift rates by 25 basis points to 1.25% at the end of its two-day meeting.
“Most respondents expect the BOJ to hike this week by 25 basis points”
Tightening could speed up
A move this week would break the bank’s recent six-month rhythm, since its last rate increase came in June.
“A hike would signal an acceleration of the tightening cycle”
Inflation and pay push
Japan’s July inflation hit 1.9%, the highest this year, while real wages rose 2.4% for a seventh straight monthly gain.
Washington adds pressure
U.S. Treasury Secretary Scott Bessent pressed BOJ Governor Kazuo Ueda to act on inflation expectations and currency swings.
“decisive market and monetary steps”
Dissent is still possible
Some analysts see room for holdouts, especially reflationist board members Toichiro Asada and Ayano Sato, both appointed this year.
“Data doesn't yet support a regime shift”
Yen seen capped
About 61% of respondents expect the yen to trade between 155 and 160 next month, with a stronger move past 150 seen as hard.
“will not be easy”
The essence
Markets are bracing for a faster BOJ tightening cycle, but the yen may still struggle to strengthen much beyond 150.
