Expectations for a BOJ rate hike strengthen; Bessent's remarks on measures to support the yen also fuel yen appreciation expectations

Expectations for a Bank of Japan rate hike have strengthened further, with views spreading that the BOJ will raise its policy rate by 0.25 percentage points to 1.25% at its September monetary policy meeting. The schedule for the BOJ's next meeting has been officially confirmed as 17–18 September. Some analysts say that inflationary pressure stemming from yen depreciation and an expansion in corporate investment are supporting the case for an additional rate hike.

According to the latest data, USD/JPY was in the upper ¥159 range as of 1 September, while Japan's 10-year government bond yield had risen to around 3.00% and the US 10-year Treasury yield remained elevated at approximately 4.78%. The market is pricing in roughly a 73% chance of a September rate hike. Corporate capital investment also remained firm, increasing 1.6% from the previous quarter.

At a G20-related interview, US Treasury Secretary Bessent (ベッセント) indicated that the Japanese government and the Bank of Japan would take measures leading to yen appreciation. Following the remarks, USD/JPY temporarily fell to around ¥159.61, although he also expressed the view that the move did not represent disorderly market conditions. Coordination between the US and Japanese finance authorities could become a factor affecting the yen exchange rate.

While concern over the possibility of foreign-exchange intervention is increasing, the situation is described as not yet having developed into an immediate call for intervention. Officials from Japan and the United States met on 1 September and shared the importance of an orderly yen market, while the decision on whether to intervene was said to depend on circumstances. Going forward, the BOJ's rate decision, US interest-rate trends and the presence or absence of foreign-exchange coordination are expected to influence the yen's direction.