Bank of Japan: Hawkish path with FX doubts – TD Securities
TD Securities’ Prashant Newnaha notes the Bank of Japan raised its cash rate by 25bps to 1.25%, in line with market expectations, and kept a hawkish framework that points to further hikes, with the next move seen in December.
TD Securities reported that the Bank of Japan increased its cash rate by 25 basis points to 1.25%, following market expectations. The bank has also maintained a hawkish stance, indicating further hikes, with the next rate increase expected in December. While Japanese government bond yields are slightly lower, the Japanese Yen has underperformed as markets focus on potential policy paralysis in 2027.
This comes as the BoJ validated its hawkish July framework, suggesting further rate hikes are likely. The Fed's hawkish outlook and geopolitical uncertainties have limited USD losses and capped the USD/JPY pair. Despite the BoJ's expected rate hike and hawkish comments from Governor Ueda, the yen has lost value due to two surprise dissents against the rate hike.
Meanwhile, gold continues to rise, and Bitcoin has seen a strong recovery after hitting a low in July, but traders question whether this marks the start of a new bullish phase or just a recovery within a bear market.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
Also reported by 3 other outlets
- Yen extends declines after Bank of Japan hikes rates with two dissents businesstimes.com.sg
- Japan raises interest rates to 31-year high to curb impact of rising prices theguardian.com
- Bank of Japan hikes rates to 31-year high to battle inflation euronews.com
