In a speech, BOJ Deputy Governor Ryozo Himino (氷見野良三) said he had not intended to signal a timely easing in the pace of monetary tightening, but markets remain alert to the possibility of a rate hike, including at the September meeting. The results of the government bond auction on the 28th also affected the market, amid mixed moves in short- and long-term interest rates.
In a speech in Saitama City, BOJ Deputy Governor Ryozo Himino (氷見野良三) said it would be desirable to ease off the accelerator at an appropriate time, making clear that the Bank would continue on its path of rate hikes. He avoided commenting on the specific timing of a rate hike. As a result, expectations grew in the bond market that the probability of a rate hike decision at the September meeting was increasing.
While there is growing market speculation that the probability of a September rate hike is increasing, Himino (氷見野良三) has not committed to a timing for the decision. Some observers said the market reaction was consistent with expectations that the BOJ would continue considering a rate hike at each meeting, with the possibility increasingly priced in.
The 2-year government bond auction held on the 28th produced a weak result, with the lowest accepted price below forecasts and a wide tail. In response, the 2-year bond yield rose to 1.700%, while long-term yields reached new highs. Combined with expectations of a September rate hike, these moves indicate that reactions in the interest-rate market are becoming more complex.
Some market participants also believe that an August consumer price index for Tokyo's 23 wards that exceeded forecasts heightened inflation concerns. Expectations regarding the amount of government bond issuance in the fiscal 2027 budget may also have affected market moves. Attention is expected to remain focused on next year's government bond issuance and the direction of long-term interest rates.