Bank of America: If the BOJ Takes a Hawkish Stance and Raises Rates Next Week, It Will Support the Yen

Odaily Odaily News According to Shusuke Yamada, a foreign exchange and interest rate strategist at Bank of America Global Research, 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 noted that the market has already priced in expectations for a rate hike.

Current market pricing indicates that following this rate hike, the probability of another rate increase at the October meeting is about 50%. If the market-assigned probability of an October rate hike rises above 60%, and the probability of a further rate increase at the March meeting the following year exceeds 50%, then the market is likely to 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)