January hike remains in focus for Japanese Yen after hawkish BoJ hold – Standard Chartered

1.25% is the policy rate Standard Chartered’s Chong Hoon Park expects the Bank of Japan to retain. He expects the bank to hold rates at its 29-30 October meeting while keeping a hawkish tone. Standard Chartered points to upside inflation risks and firmer Tokyo CPI and PPI readings, alongside weak domestic demand and subdued consumption. Although a December hike is possible, January 2027 remains the base case for the next increase.

JPY Outlook: BoJ Policy Stance

"We expect the Bank of Japan (BoJ) to keep the policy rate unchanged at 1.25% at its 29-30 October meeting, following September’s 25bps hike."

"However, we expect policy makers to maintain a clearly hawkish tone."

"As a result, the debate is increasingly shifting from whether the BoJ will hike again to when the next hike will occur."

"While December is now a live meeting, January 2027 remains our base case for the next hike."

"At the same time, the BoJ has an incentive to continue policy normalisation to support yield differentials and reduce the risk of renewed JPY weakness, particularly if the Fed resumes tightening or maintains a restrictive policy stance for longer than expected."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)