BOJ Expected to Hike Policy Rate to 1.25%

The Bank of Japan is set to decide on its policy rate overnight, and Danske Research Team expects the central bank to raise it to 1.25%. This move has largely been priced in by investors as market expectations have tightened significantly over recent weeks.

Danske anticipates that the BoJ will signal a more nimble tightening pace than its cautious cycle so far. Any deviation from this approach could weigh heavily on the Japanese Yen, particularly with core CPI pressures picking up.

Ahead of the meeting, fresh August CPI data is set to be released, showing signs of increasing price pressures, which is also reflected in the Tokyo data published earlier this month.