BOJ Deputy Governor Backs Further Rate Hikes, Markets Await Speed Signal
The Bank of Japan (BOJ) Deputy Governor Ryozo Himino has reinforced his support for further interest-rate increases, but stopped short of committing to a specific timeline. Despite this, money markets are already pricing in an 87% chance of a September hike, with a Reuters poll of economists showing 57% expecting the policy rate to rise to 1.25% next month.
Himino's remarks were seen as a validation of the tightening direction, but the speed remains open, leaving markets uncertain about the pace of future rate hikes. The terminal rate debate has moved further out, with nearly two-thirds of analysts now expecting the policy rate to reach at least 1.75% by the end of the third quarter of 2027.
The USD/JPY pair traded around 159.24 shortly after Himino's remarks, down roughly 0.04% on the day and within a few pips of its pre-speech level. The non-reaction is seen as evidence that markets are waiting for a clear signal from the BOJ about the speed of future rate hikes.