Bank of America: If the Bank of Japan takes a hawkish stance and raises interest rates next week, it will support the yen

Odaily Odaily Planet Daily News Bank of America Global Research foreign exchange and interest rate strategist Shusuke Yamada stated that if the Bank of Japan adopts a hawkish stance and raises interest rates at its meeting next week, it is expected to provide support for the yen. He pointed out that the market has already priced in expectations of a rate hike.

Current market pricing indicates that after this rate hike, the probability of another rate hike at the October meeting is approximately 50%. If the market's pricing probability for an October rate hike rises above 60% and the pricing probability for a further rate hike at the March meeting next year exceeds 50%, the market will likely interpret this as a "hawkish" stance. Therefore, the market's focus will be on the guidance provided by the Bank of Japan at next week's meeting regarding the future path of policy interest rates. (Jin Shi)