BOJ Set to Raise Policy Rate to 1.25% Amid U.S. Pressure and Yen Weakness

The Bank of Japan (BOJ) is expected to increase its policy interest rate by 0.25 percentage point to 1.25 % at its monetary-policy meeting on September 17-18. A Reuters poll of 68 economists found that 97 % anticipated the September hike, and many also see a second increase to at least 1.50 % by March 2027.

BOJ to raise rates to 1.25% this month, reach 1.75% faster than expected

• The BOJ ended negative rates in March 2024 and raised the rate to around 1.0 % in June 2024.

Bank of Japan Sees ‘Opportunity’ as Fed Leans Toward Interest Rate Decision

• Underlying inflation has edged close to the BOJ’s 2 % target, driven by higher oil prices, a weaker yen and AI-related demand.

BOJ Seen to Raise Rate to 1.25 Pct at Next Week's Meeting

• Real wages rose 2.4 % in July, the fastest pace in five years, while nominal wages jumped 4.7 % YoY—the largest increase since 1997.

Bank of Japan Set to Raise Rates to 1.25% at September Meeting, Highest in About 31 Years — BigGo Finance

• The yen has appreciated to roughly ¥153 per dollar, its strongest level since February, after a 6.6 % rally that followed a joint U.S.–Japan intervention on July 31.

Bank of Japan Sees ‘Opportunity’ as Fed Leans Toward Interest Rate Decision

• Policy rate target: 1.25 % (proposed).

Bank of Japan Expected to Raise Policy Rate by 25 Basis Points to 1.25% Next Week, Highest in 31 Years — BigGo Finance

• Inflation: Core price growth approaching the 2 % goal.

Bank of Japan Expected to Raise Policy Rate by 25 Basis Points to 1.25% Next Week, Highest in 31 Years — BigGo Finance

• Wage growth: Nominal +4.7 % YoY; real +2.4 % YoY.

Bank of Japan Set to Raise Rates to 1.25% at September Meeting, Highest in About 31 Years — BigGo Finance

• Yen exchange rate: Around ¥153.37 per dollar on the Wednesday after the poll.

Bank of Japan Sees ‘Opportunity’ as Fed Leans Toward Interest Rate Decision

• Fiscal outlook: Budget requests total ¥143.1 trillion (? $931 billion), comparable to the COVID-19 fiscal year.

BOJ to raise rates to 1.25% this month, reach 1.75% faster than expected

• Market expectations: 75 % of economists forecast a terminal rate of 1.75 % by Q2 2027.

BOJ to raise rates to 1.25% this month, reach 1.75% faster than expected

• Kazuo Ueda, BOJ Governor, said the bank will continue to raise rates while “financial conditions remain accommodative,” preferring a 25-basis-point step to avoid market disruption.

BOJ Poised to Raise Rates to 1.25% Next Week, Highest in 31 Years — BigGo Finance

• Masu Kazuyuki, BOJ board member, told a press conference in Fukui City that discussions on the policy rate will “certainly be held,” emphasizing careful examination of exchange-rate, crude-oil and international-food-price developments.

Bank of Japan Expected to Raise Policy Rate by 25 Basis Points to 1.25% Next Week, Highest in 31 Years — BigGo Finance

• The Reuters poll projects a second hike to 1.50 % by March 2027, while a follow-up shows 40 % of respondents now expect a terminal rate of 2.00 % or higher.

BOJ to raise rates to 1.25% this month, reach 1.75% faster than expected

• Some market commentators anticipate a faster cadence of hikes, but the BOJ has not disclosed a definitive timetable beyond September.

BOJ Seen to Raise Rate to 1.25 Pct at Next Week's Meeting

• “Until now, it would be hard for the BOJ to explain any adjustment to the degree of monetary easing while the (Japanese) government maintained an accommodative fiscal stance,” — Yusuke Koshiyama, senior Japan economist, Mizuho Research Institute

BOJ to raise rates to 1.25% this month, reach 1.75% faster than expected

• “Since Japan's hesitation over policy tightening in the past, the faster build-up of inflation expectations suggests the central bank might need to hike rates more to achieve the same outcome,” — Kelvin Lam, senior economist, Pantheon Macroeconomics

BOJ to raise rates to 1.25% this month, reach 1.75% faster than expected

The BOJ’s policy-rate decision is slated for September 17-18. If the 1.25 % hike is confirmed, analysts expect the bank to consider another 25-basis-point increase in December 2024 or January 2025, contingent on inflation trends and fiscal developments. Market participants will watch the BOJ’s language for clues about the pace of future tightening and the impact on the yen-dollar pairing.

BOJ Poised to Raise Rates to 1.25% Next Week, Highest in 31 Years — BigGo Finance