The Japanese Yen remained steady near 155.25 against the US Dollar during the early Asian session on Wednesday, as traders awaited the US Federal Reserve's interest rate decision later in the day and the Bank of Japan's (BoJ) rate decision on Friday [1]. According to a CNBC survey conducted between September 9-14 among 18 economists and analysts, most respondents expect the BoJ to hike rates by 25 basis points to 1.25% at the end of its two-day meeting on Friday, marking the highest borrowing costs for Japan since April 1995 [1][2]. This anticipated hike is attributed to persistent inflation, rising wages, and pressure from the U.S. government, with Japan's headline inflation rate for July reaching 1.9% and real wages increasing by 2.4% for the seventh consecutive month [2].
The survey also revealed that 89% of respondents expect the BoJ to raise rates by 25 basis points, while outliers such as Jesper Koll foresee a 50 basis point hike and Carlos Casanova expects the BoJ to hold rates steady for now, citing insufficient data to justify a faster pace of rate hikes and ongoing risks from Iran tensions and oil prices [2]. The BoJ's tightening cycle is expected to accelerate, breaking from the previous six-month interval between hikes since policy normalization began in March 2024, with the last hike occurring in June [2].
Strategists at Scotiabank and Mizuho Securities highlighted that the market has already priced in the expected hike, and the key driver will be the BoJ's tone and guidance on future rate hikes. Masafumi Yamamoto, chief currency strategist at Mizuho Securities, warned of a potential retreat toward 157 yen per dollar, noting that it will be difficult for the BoJ to be more hawkish than market expectations [1]. Around 61% of CNBC survey respondents expect the yen to trade between 155 and 160 in the next month [2].
Technical analysis indicates that USD/JPY remains under downside pressure, holding below key moving averages with subdued momentum, suggesting any corrective uptick would likely face selling interest [1]. On the topside, resistance levels are identified at 157.15, 159.60, and 162.00, while immediate downside focus is on the lower Bollinger band [1].
Treasury Secretary Scott Bessent urged BoJ Governor Kazuo Ueda to take decisive market and monetary steps at the recent G20 meeting, emphasizing the importance of anchoring inflation expectations and avoiding excess volatility in exchange rates [2]. The Trump administration has reportedly given the BoJ a free hand to proceed with rate hikes, according to Takahide Kiuchi, executive economist at Nomura Research Institute [2]. Some BoJ board members, particularly Toichiro Asada and Ayano Sato, are seen as potential dissenters on the hike, being identified as reflationists appointed by Prime Minister Sanae Takaichi earlier this year [2].
CONCLUSION
Both sources indicate that the Bank of Japan is widely expected to raise its key policy rate by 25 basis points to 1.25%, driven by inflation and wage pressures. The market has largely priced in the hike, with attention now focused on the BoJ's guidance for future rate increases. The yen is expected to remain in the 155-160 range, and market sentiment is cautiously optimistic but sensitive to central bank messaging.