BlockBeats news, on September 10, Kazuyuki Masuda, a member of the Bank of Japan’s Monetary Policy Committee, said on Thursday that Japan is no longer in deflation and that the central bank must address the issue of real negative interest rates as soon as possible and further raise policy rates. He warned that if underlying inflation significantly exceeds 2%, the Bank of Japan may need to accelerate the pace of rate hikes.
The market generally expects the Bank of Japan to raise interest rates by 25 basis points to 1.25% at its upcoming policy meeting next week. Some traders are even betting that the central bank may signal another rate hike in October.
U.S. Treasury Secretary Bessent previously said he was “quite familiar” with the next steps the Bank of Japan might take, further strengthening market expectations of a Japanese interest rate hike. Meanwhile, the yen has rebounded from a low near 164 in July to around 153.5, reaching a six-month high.
Stefan Angrick, Moody's Head of Economics for Asia-Pacific, believes that the Bank of Japan's hawkish stance is another signal of its move toward rate hikes, and expects the central bank may increase the frequency of future rate hikes to once every three months.
In the bond market, Japan's 10-year government bond yield has surpassed 3%, reaching its highest level in about 30 years, indicating that markets are rapidly reassessing the asset pricing implications of Japan's monetary policy normalization.