AUD/JPY Tumbles as BoJ Rate Hike Expectations Grow

The AUD/JPY cross has lost momentum and is trading near 110.75 during the early European session on Thursday, as the Japanese Yen (JPY) strengthens against the Australian Dollar (AUD).

Rising expectations of a near-term interest rate hike by the Bank of Japan (BoJ) are contributing to this trend.

A Reuters poll suggests that the BoJ is likely to hike interest rates to 1.25% at its September policy meeting and then to 1.75% in the second quarter of 2027, earlier than previously thought.

BoJ board member Kazuyuki Masu stated that the central bank may eventually be forced to raise interest rates rapidly if inflation accelerates, given Japan's loose financial conditions.