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2025-07-30 10:53:06
[The Bank of Japan is expected to keep interest rates unchanged this week, with expectations of an autumn rate hike rising] 1. The Bank of Japan is expected to keep interest rates unchanged at its policy meeting on Thursday, but may raise its inflation and economic growth forecasts in a hawkish tone, paving the way for an autumn rate hike. According to Dongdan Research/ICAP data, the probability of a rate hike in September is 20%, rising to 40% in October. The probabilities for December and January 2026 are lower, at 18% and 16%, respectively. 2. Japanese government bond yields have retreated from their highs, with the 10-year JGB yield at around 1.570% and the two-year yield at around 0.829%. High inflation has led to market expectations that the central bank will raise its price outlook, and the 15% US tariff on Japanese imports may boost economic growth expectations. Former Bank of Japan Deputy Governor Hiroshi Nakaso stated that if the economy and inflation meet expectations, the central bank may resume rate hikes, but remains vigilant against rising inflation risks. 3. USD/JPY's upside may be limited. The Bank of Japan's hawkish stance may intensify, while expectations of autumn easing by the Federal Reserve have strengthened, with some members favoring an expedited rate cut.
