A former Bank of Japan official said the BOJ is likely to raise rates next month
(September) and that markets have essentially fully priced a hike; failure to
tighten could trigger another sharp yen selloff. He cited U.S. Treasury official
BESSENT’s view that policy action should follow any FX intervention and
BESSENT’s hope that governor UEDA will lift rates, adding that BESSENT has
repeatedly signaled the BOJ may be next to act and that the government cannot
tell the BOJ not to. He said Japan’s inflation momentum is strong and, after an
expected September increase, the BOJ is likely to continue
tightening—potentially acting again in January and extending the cycle beyond
previously assumed terminal rates of 1.25–1.5%.
