BoJ Hawkish Comments Fail to Move Markets as USD/JPY Stalls

The recent decline of the USD/JPY has stalled despite hawkish comments from Bank of Japan member Kazuyuki Masu, according to Brown Brothers Harriman's Elias Haddad. The market is already pricing a 25bps hike to 1.25% on September 18.

However, Haddad sees a possible 50bps move given inflation near the target of 2% and an economy running above capacity. He outlines scenarios where risks are tilted towards a stronger Japanese Yen.

Masu emphasized the need for further rate hikes to normalize monetary policy in Japan, stating that the Bank needs to raise the policy interest rate 'further, so that it falls solidly within the estimated range of the neutral interest rate (1.10% and 2.50%)'.