Japanese Yen: BoJ’s hawkish hold leaves January hike in focus – Standard Chartered

Firmer Tokyo CPI and PPI data point to upside inflation risks, Standard Chartered notes, although domestic demand remains weak and consumption subdued. Against this backdrop, the bank’s Chong Hoon Park expects the Bank of Japan to leave its policy rate at 1.25% at the 29-30 October meeting while retaining a hawkish tone. Although December is considered a live meeting, January 2027 remains the base case for the next rate increase.

BoJ expected to retain hawkish stance, with 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."

(An editor reviewed this article, which was produced with assistance from an Artificial Intelligence tool. Find out more.)