Standard Chartered anticipates a hawkish hold from the Bank of Japan this month, keeping a January rate hike on the table as officials weigh inflation risks against sluggish domestic consumption.
The Japanese Yen is supported by the Bank of Japan's persistent hawkish stance, as highlighted by Standard Chartered's expectation that the central bank will maintain a 1.25% policy rate while signaling future tightening. Despite concerns over weak domestic demand and consumption, the BoJ is monitoring upside inflation risks and firming Tokyo CPI and PPI data to justify a potential rate hike in the near future.
Standard Chartered expects the Bank of Japan to hold the policy rate at 1.25%.
While December is considered a live meeting, January 2027 remains the base case for the next rate hike.
Standard Chartered projects the Bank of Japan will maintain its policy rate at 1.25% during the October 29-30 meeting. While domestic demand remains weak, the central bank is expected to retain a hawkish stance due to persistent upside inflation risks and firming Tokyo CPI and PPI data.
Analysts expect the BoJ to hold rates at 1.25% in October while maintaining a hawkish bias, with a potential rate hike targeted for January 2027.