Nomura Securities said that under extreme circumstances where the yen continues to weaken, the Bank of Japan may continue to raise interest rates during the three meetings before December. Yujiro Goto, head of foreign exchange strategy at Nomura Japan, said in an interview that this month's interest rate hike of 25 basis points “seems reasonable” and that “if the weak yen continues to approach 160, interest rate increases may continue in October and December.” Goto's remarks highlighted a major shift in market expectations for the Bank of Japan, which had previously maintained a cautious attitude towards policy normalization. The yen has risen more than 2% against the US dollar to around 156 this week. This wave of gains was driven by speculations that the Japanese government pension investment fund may reconsider its asset allocation. Outsiders also expect the Bank of Japan to speed up the pace of interest rate hikes. The overnight index swap fully reflects the expectation that the Bank of Japan will raise interest rates by 25 basis points in September, and the expectation of another rate hike in January has also been fully reflected.

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