Following coordinated US-Japan intervention, the dollar-yen rate fell temporarily from around ¥164 and was trading at ¥157–158 as of 9 August. Ahead of the BOJ's September meeting, expectations for a rate hike are strengthening, and the possibility of rates moving above the neutral rate is once again being discussed.
Following coordinated US-Japan intervention, the dollar-yen rate fell temporarily from around its year-to-date high of ¥164 to the ¥155 range and is currently trading at ¥157–158. The risks of further intervention remain, but the market is currently in a period of relative calm.
With the BOJ's Monetary Policy Meeting scheduled for 17–18 September, expectations are growing that US Treasury Secretary Bessent will encourage a rate hike while coordinating it with yen-buying intervention and monetary policy.
BOJ Governor Ueda (植田) has indicated a policy of deepening discussions at upcoming meetings in light of upside risks to prices, and the risk balance in the Outlook for Economic Activity and Prices has been revised upward.
The discussion of the risk balance surrounding the price outlook indicates that the risk of the underlying inflation rate exceeding 2% remains. Some have also suggested that, if financial conditions are judged to be accommodative, the BOJ could accelerate the pace of rate hikes.
A rate hike is now in view as the next move, and expectations are spreading that its timing is not far off. Coordinated US-Japan intervention and the Treasury secretary's remarks have also focused attention on the government's distance from the BOJ.