1. Reuters: Economists surveyed expect the policy rate to reach 1.5% by the end of March next year and 1.75% in the second quarter of 2027. Most economists believe the rate will eventually reach at least this level.
2. Nikko Securities: Expects a 25 basis point rate hike to 1.25%, with a further increase to 1.75% by June 2027. If oil prices rise further and other central banks raise rates, increasing the risk of yen depreciation, the rate could rise further to 2.25%.
3. OCBC Bank: This rate hike was largely expected. The bigger question is how the governor will plan the policy path after September, especially whether the central bank will signal a faster pace of normalization given that inflation remains high.
4. BNP Paribas: Expects a 25 basis point rate hike to 1.25%, followed by further increases to 1.75% in December and March next year. The Bank of Japan may be concerned about upside risks to inflation, as companies may pass on rising energy, metal, and chip costs to consumers in the future.
5. Goldman Sachs: Today's decision is a done deal, with a further rate hike possibly as early as December. High energy prices, strong AI demand, a weaker yen, and loose fiscal policy could all drive inflation higher than expected. Japanese government bond yields still have room to rise, and current levels do not match the resilience of the Japanese economy.
6. TD Securities: Expects a 25 basis point rate hike to 1.25%, followed by 25 basis point hikes in December of this year, April, July, and October of 2027, raising the target rate to 2.25%. If the guidance does not take into account a rate hike in October or December, the yen may be sold off to the 157-160 range.
7. Mitsubishi UFJ: The market expects the Bank of Japan to raise rates by 25 basis points and hint at further rate hikes. If the central bank does not release sufficiently hawkish rate hike signals, the yen may weaken. However, since the market has already priced in a cumulative rate hike of 90 basis points over the next 12 months, a cautious stance from Kazuo Ueda could put pressure on the yen.
8. T. Rowe Price: Market focus is on "the extent to which the Bank of Japan will open the door to further policy normalization to avoid a sharp depreciation of the yen against the dollar"; this is especially important after the Fed's hawkish stance led to a sharp rebound in the USD/JPY exchange rate overnight.
9. Rabobank: The market has not only largely priced in rate hike expectations, but also anticipates that Governor Kazuo Ueda will have to send hawkish signals on the future pace of rate hikes in order to maintain the yen's recent positive momentum; otherwise, the yen may experience a "sell the rumor" reaction against the dollar before the weekend.
10. Danske Bank: Investors have largely priced in rate hike expectations, and market pricing has tightened significantly in recent weeks. Governor Kazuo Ueda is not expected to reverse this trend and will release tightening signals that are more flexible than the very cautious rate hike cycle so far. Any other moves will put heavy pressure on the yen.
