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BOJ speakers ahead of Sept 18 policy decision as rate hike odds surge
Market pricing in overnight-index swaps points to an roughly 82% chance of a September hike, up from about 23% before the July meeting, raising sensitivity to BOJ communication and yen moves.
Bank of Japan officials are set to make several public appearances before the next policy decision on Sept. 18, in a run-up that markets are using to gauge whether the central bank will push rates higher in September.
According to LiveMint Markets, deputy governor Ryozo Himino will kick off the schedule with a key speech on Thursday, with governor Kazuo Ueda expected to follow with a press briefing after a Group of 20 meeting in the US next week. The timing follows Ueda’s stated emphasis on thorough communications after a July 2024 decision that left some traders surprised.
LiveMint Markets said market pricing has become increasingly aggressive: as of late Friday, overnight-index swaps implied a roughly 82% probability of a September hike, more than tripling from about 23% immediately before the BOJ’s July policy meeting. The yen is also a key factor, because holding policy steady while markets expect a hike could prompt a steep currency decline as traders unwind positions.
Because Japan has limited room to sound dovish while the yen remains near the psychologically important 160-per-dollar level, BOJ watchers are likely to focus on nuance in officials’ wording, including any emphasis on uncertainty or the need to assess more data. LiveMint Markets noted that bets on a September move surged after a rare coordinated currency intervention by the US and Japan late last month.