BOJ Rate Hike Expected as Strong GDP Data Boosts Resilience

The Bank of Japan's policy meeting next week is expected to be closely watched as investors assess whether the economy can withstand further monetary tightening. Stronger economic data, including a revised annualized GDP growth rate of 1.4% in Q2, has reinforced expectations for another interest rate hike.

The upward revision in Japan's Q2 GDP was largely driven by capital expenditure, which declined 0.9% compared to the preliminary estimate of a 1.2% contraction. Private consumption remained unchanged from the previous quarter.

Recent corporate spending data has pointed to underlying resilience in business investment, with Japanese companies increasing spending on plant and equipment by 1.6% in Q2 from a year earlier. Additionally, wage data released showed inflation-adjusted real wages rose 2.4% in July from a year earlier.