BOJ Under Pressure to Hike Rates After Japan's Currency Intervention

The Bank of Japan (BOJ) is under pressure to raise interest rates following Japan's coordinated currency intervention with the United States and South Korea in late July. The yen-buying operation pushed the Japanese currency about 5% higher, although it has struggled to sustain those gains.

Market expectations for monetary tightening have shifted sharply since the intervention. Traders now price in an additional 25 basis points of BOJ rate hikes this year, with a 76% probability of a hike in September, up from 24% on July 30.

U.S. Treasury Secretary Scott Bessent's calls for Japan to complement currency intervention with appropriate monetary policy and economic fundamentals have been interpreted as pressure on Tokyo to allow the BOJ to raise rates.