BoJ Policy Meeting Fails to Boost Yen as October Hike Bets Fade

The Japanese Yen has weakened about 0.5% against the US Dollar, lifting USD/JPY to 158.44, following the Bank of Japan's (BoJ) Summary of Opinions from its latest policy meeting on September 17-18.

MUFG's Lee Hardman reports that the BoJ's Summary of Opinions disappointed expectations for an October rate hike, causing Japanese rate markets to scale back BoJ tightening pricing.

Despite this, MUFG still expects another hike in December. According to Hardman, 'another hike as soon as next month remains unlikely given that the BoJ had just sped up the pace of hikes this month and signalled that it is likely to continue hiking rates every three months.'

Rising Japanese rates should support the Yen over time, but global tightening complicates efforts to curb weakness. The BoJ's Summary of Opinions reiterated that underlying inflation is now getting closer to their 2.0% target.