Fed and BOJ Rate Hikes This Week: Will the Yen Rally?

The Federal Reserve and Bank of Japan are set to raise interest rates within 48 hours this week, putting the Japanese yen and global risk assets in focus.

The Fed is due to announce its decision on Wednesday, September 16, while the BOJ will conclude its two-day meeting on Friday, September 18. Markets expect a 25-basis-point increase from both central banks, although the BOJ's decision remains less certain.

A survey of 18 economists conducted by CNBC found that 89% expected the BOJ to increase rates by 25 basis points, taking the policy rate to its highest level in roughly three decades. The move is driven by persistent inflation, stronger wages, and external pressure.

The yen's reaction could depend on guidance from both central banks rather than simply whether they raise rates. A BOJ hike would normally provide support for the yen, but a Fed hike would preserve a significant interest-rate advantage for the U.S. dollar.