BOJ to Give Clues on Interest Rates Amid Market Bets on September Hike
The Bank of Japan (BOJ) is set to give clues about its next move on interest rates, as markets heavily bet on a September hike. BOJ officials will start giving speeches and press briefings in the coming weeks, with Deputy Governor Ryozo Himino kicking off the series on Thursday.
As of late Friday, the overnight-index swaps market implied a roughly 82% probability of a September hike, more than tripling from about 23% immediately before the BOJ's July policy meeting. This has sparked concerns that if the BOJ decides to hold policy settings at a time when the market is betting on a hike, there's a risk Japan's currency would fall steeply.
BOJ Governor Kazuo Ueda has emphasized thorough communications with the markets ever since he was heavily criticized for a decision to hike rates in July 2024 that appeared to catch some traders off guard. Experts say Ueda is likely to follow Himino with a press briefing after a Group of 20 gathering in the US next week.
BOJ watchers are closely monitoring the subtle signals from officials, as bets on a September move surged after the US and Japan conducted a rare coordinated currency intervention late last month. Investors will get further opportunities to test the September thesis with speeches by board members Hajime Takata on Sept 2 and Kazuyuki Masu on Sept 10.