BOJ Bets Heat Up as Fed Rate Hike Chances Cool Down

The Federal Reserve's rate hike bets have cooled down after Wednesday's US CPI data came in line with expectations, while the Bank of Japan's bets have heated up due to rising wholesale inflation.

Wednesday's US CPI data was largely in line with forecasts, and coupled with softer-than-expected July nonfarm payrolls, it has dampened money-market bets on a September Federal Reserve rate hike.

In contrast, Thursday's Japanese wholesale inflation data reinforced expectations for a September rate hike by the Bank of Japan. The 7.2% year-on-year rise in July was driven in part by strong demand induced by the AI boom and higher raw-material costs from the Middle East war.