JPMorgan says the Bank of Japan faces an increasingly difficult policy loop: rising yen depreciation pressure could force earlier rate hikes, but a September move seen by markets as a direct response to the currency may encourage bets on faster follow-ups and raise policy-expectation uncertainty. After June’s tightening, a September hike would shorten the interval to three months, faster than the previously signalled gradual, data-dependent pace. JPMorgan cautions that if markets price a ‘weaker

JPMorgan says the Bank of Japan faces an increasingly difficult policy loop: rising yen depreciation pressure could force earlier rate hikes, but a September move seen by markets as a direct response to the currency may encourage bets on faster follow-ups and raise policy-expectation uncertainty. After June’s tightening, a September hike would shorten the interval to three months, faster than the previously signalled gradual, data-dependent pace. JPMorgan cautions that if markets price a ‘weaker yen → BoJ hikes’ feedback, future tightening may become market-driven, increasing the sensitivity of the yen and JGBs to exchange-rate swings; it therefore expects policy adjustments in September and December, advancing BoJ normalization.