Japanese Yen: BoJ hawkish hold keeps January hike in focus – Standard Chartered

Standard Chartered’s Chong Hoon Park expects the Bank of Japan to keep its policy rate at 1.25% at the 29-30 October meeting, maintaining a hawkish tone. The bank notes upside inflation risks and firmer Tokyo CPI and PPI data, but highlights weak domestic demand and subdued consumption. December is seen as a live meeting, while January 2027 remains the base case for the next hike.

BoJ stance and implications for JPY

"We expect the Bank of Japan (BoJ) to keep the policy rate unchanged at 1.25% at its 29-30 October meeting, following September’s 25bps hike."

"However, we expect policy makers to maintain a clearly hawkish tone."

"As a result, the debate is increasingly shifting from whether the BoJ will hike again to when the next hike will occur."

"While December is now a live meeting, January 2027 remains our base case for the next hike."

"At the same time, the BoJ has an incentive to continue policy normalisation to support yield differentials and reduce the risk of renewed JPY weakness, particularly if the Fed resumes tightening or maintains a restrictive policy stance for longer than expected."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)