According to a recent CNBC survey, approximately 89% of economists expect the Bank of Japan (BOJ) to increase rates by 25 basis points, which would accelerate its tightening cycle that has been in place since March 2024. The last rate hike occurred in June, and the current inflation rate in Japan reached 1.9% in July, driven by rising energy costs linked to the Iran conflict.
Additionally, real wages have increased by 2.4%, marking seven consecutive months of growth. Treasury Secretary Scott Bessent has urged BOJ Governor Kazuo Ueda to take decisive action to manage inflation expectations and stabilize exchange rates.
Analysts from Nomura Research Institute and UBP have differing views on the pace of rate hikes, with some suggesting a more aggressive approach while others caution against moving too quickly due to insufficient data.
The survey also indicated that the yen is expected to trade between 155 and 160 in the coming month, with a majority believing that the BOJ's hawkish stance will support a stronger yen, although rapid appreciation past 150 may face resistance from government and business interests