Many expect USD/JPY to settle at around ¥157 at year-end, with the scenario of a return to yen depreciation accounting for approximately 70% of forecasts. Meanwhile, the BOJ kept policy unchanged at its August monetary policy meeting and intends to consider future rate hikes flexibly while monitoring economic and price trends.
USD/JPY is expected by some to rise to around ¥157 toward year-end, with a return to yen depreciation accounting for approximately 70% of market forecasts. Related analysis suggests that pressure for yen depreciation is likely to persist against the backdrop of coordination between the government and the BOJ.
The BOJ concluded its August meeting with policy unchanged, partly because no monetary policy meeting had been scheduled for August. The next meeting is scheduled for 17-18 this month, and attention is focused on the direction of monetary policy.
Based on comments from the BOJ's deputy governor and policy board members, more observers now view a September rate hike as almost certain. The September rate hike is expected to bring the policy rate to 1.25%, and the BOJ has indicated that it may consider raising rates to around 1.5% from next spring onward. However, the move could be brought forward if pressure for yen depreciation or US rate hikes intensifies.
The prevailing view of the outlook is that the BOJ's pace of rate hikes could change flexibly depending on domestic and overseas conditions. While expectations of a September rate hike are strengthening in the market, some still believe the BOJ should proceed cautiously after assessing the balance between prices and growth.
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