Japan's Q2 Growth Revised Higher as BOJ Prepares for Rate Hike

Japan's economic growth in Q2 has been revised higher to 1.4% annualized, thanks largely to a smaller-than-expected decline in business spending.

The Cabinet Office released revised figures that show capital expenditure (capex) fell by just 0.9%, compared to an initial estimate of 1.2% drop.

This upward revision is significant because it suggests that Japan's economy can handle higher interest rates, which is a key consideration for the Bank of Japan (BOJ).

With interest-rate swaps pricing in a nearly 98% chance of a rate hike from 1% to 1.25% in September, and fully pricing 1.5% by January, the BOJ's communication next week will be focused on whether it is comfortable with the market's longer-term path.