The latest report from Société Générale interest rate strategists indicates that the Bank of Japan is not expected to raise interest rates at the September policy meeting. The bank believes that in the face of the recent strong rebound in the yen, the Japanese authorities will instead continue to rely on foreign exchange intervention to stabilize the exchange rate rather than rush to tighten monetary policy. Although the US and Japan recently coordinated intervention in the foreign exchange market for the first time since the 90s of the last century, triggering widespread speculation that the Bank of Japan will speed up the pace of interest rate hikes, Société Générale strategists Stephen Spratt and Sakita Reo clearly stated in their report that this expectation is not in line with historical laws. They pointed out that judging from historical experience, the Japanese authorities have always viewed foreign exchange intervention as a means to ease the pressure on the Bank of Japan to tighten monetary policy. Based on the above judgment, Société Générale expects the Bank of Japan's next rate hike to be postponed until October, when the rate hike will be 25 basis points. The bank further predicts that Japan's policy interest rate will reach the target level of 2% in the fourth quarter of 2027.
Zhitongcaijing · 1d ago
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The latest report from Société Générale interest rate strategists indicates that the Bank of Japan is not expected to raise interest rates at the September policy meeting. The bank believes that in the face of the recent strong rebound in the yen, the Japanese authorities will instead continue to rely on foreign exchange intervention to stabilize the exchange rate rather than rush to tighten monetary policy. Although the US and Japan recently coordinated intervention in the foreign exchange market for the first time since the 90s of the last century, triggering widespread speculation that the Bank of Japan will speed up the pace of interest rate hikes, Société Générale strategists Stephen Spratt and Sakita Reo clearly stated in their report that this expectation is not in line with historical laws. They pointed out that judging from historical experience, the Japanese authorities have always viewed foreign exchange intervention as a means to ease the pressure on the Bank of Japan to tighten monetary policy. Based on the above judgment, Société Générale expects the Bank of Japan's next rate hike to be postponed until October, when the rate hike will be 25 basis points. The bank further predicts that Japan's policy interest rate will reach the target level of 2% in the fourth quarter of 2027.
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