BoJ Rate Hike in September Predicted as JPY Faces Downside Pressure

The Japanese Yen is holding steady against the US Dollar at around 159.35, but rising pressures are making a case for a Bank of Japan (BoJ) interest rate hike in September.

Tokyo's inflation data has accelerated, with headline CPI reaching 1.9% in August and service sector price gains hitting nearly a one-year high. This surge in market odds for a BoJ rate hike has economists warning that any delay could trigger renewed downside pressure on the Japanese Yen.

Commerzbank believes that Tokyo's inflation metrics confirm Japan has reached the central bank's 2% target, particularly across underlying service categories. With the BoJ's current policy rate at the bottom of its neutral range, failing to raise rates in September would risk undermining JPY stability.