BOJ Likely to Hike Rates Sooner Rather than Later

Dow Jones
08/12

0546 GMT - Market expectations for a 25 basis point interest rate hike by the Bank of Japan at its September meeting have risen sharply following the latest round of yen-buying intervention by Japan and U.S. authorities, says Carol Kong, currency strategist at CBA. There is speculation that U.S. participation in the intervention was accompanied by an expectation that BOJ policy normalisation would follow, she adds. The risk of the BoJ raising rates earlier than CBA's current forecast for December has increased, she says. With a September hike now about 80% priced, keeping the policy rate on hold will disappoint market expectations and fuel a renewed yen weakness, Kong says.

 

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