BOJ Officials Open Door to 50-Basis-Point Rate Hike

The USD/JPY pair has fallen to its lowest level since August 3, trading at 155.40 against the yen after a violent decline of over 2% in a single day.

The drop was accelerated by comments from two Bank of Japan officials, who suggested that the central bank may consider a larger-than-expected rate hike.

Board member Hajime Takata stated that a 25-basis-point hike is not set in stone and that back-to-back increases are possible, while Governor Kazuo Ueda said that the board will consider a hike at every meeting, including the September 17-18 gathering.

The market has responded accordingly, with roughly 90% pricing for a 25-basis-point hike now close to fully priced and a small probability assigned to a 50-basis-point increase.