BOJ policymaker Himino says won't comment on market expectations on rate hike

Further remarks on the day by BOJ deputy governor, Ryozo Himino: BOJ will assess its next steps by evaluating the likelihood of its scenario and associated risks. This includes considering the Middle East conflict, demand for AI, and the impact of foreign exchange rates. These factors will help determine the pace and timing of future rate hikes. The BOJ believes it can stabilize underlying inflation at 2% through appropriate policy moves. At each meeting, policymakers will debate the desirable pace and timing of rate hikes. Himino’s personal view on the economy and prices has not changed much since the July meeting, though the likelihood of the baseline scenario materializing may have increased. He agrees that the BOJ may step up rate hikes if financial conditions are too accommodative, but notes that rate hike decisions cannot be made solely based on financial accommodation. Traders are currently pricing in about a 66% chance of a rate hike for next month, with a full 25 basis points already anticipated by October. The BOJ’s reluctance to be explicit about its next steps is a recurring theme. There is speculation that a US-Japan joint intervention to bolster the yen may involve a silent agreement for the BOJ to play a part. The USD/JPY rate has risen back above 159.00 this week, adding pressure. Japanese authorities are reportedly running out of ideas to stop the yen’s decline. Meanwhile, unrelated market updates include Nvidia earnings analysis, Nasdaq critical levels, and various financial news unrelated to the BOJ’s policy discussion.