Yen Strengthens, Is the Market Ready for a BOJ Rate Hike?
The Japanese yen strengthened to around 155 per US dollar on Friday and is on track for a second consecutive weekly gain. This strengthening was driven by speculation that the Bank of Japan (BOJ) could raise interest rates later this month, a rare move after years of ultra-loose policy.
Reports suggest that several key members of Prime Minister Sanae Takaichi's government would not oppose a BOJ rate hike in December, although some senior officials remain cautious about the timing. The market is now pricing in a rate hike this month, with the possibility of one or two additional hikes next year, if the economy remains in line with expectations.
These expectations were further strengthened after BOJ Governor Kazuo Ueda expressed confidence in Japan's economic outlook and asserted that the central bank would carefully weigh the pros and cons of a rate hike before acting. Finance Minister Satsuki Katayama also reiterated that she expects the BOJ to pursue policies capable of achieving its 2% inflation target on its own. This combination of signals has convinced the market that the era of ultra-low interest rates in Japan could be shifting. (az)
Source: Newsmaker.id
