BOJ hawkish member says rate hike must come soon, market bets on 25 basis point hike next week

BlockBeats news, September 10 — Bank of Japan Monetary Policy Committee member Kazuyuki Masu said on Thursday that Japan is no longer in deflation, the central bank must resolve the issue of real negative interest rates as soon as possible, and further raise the policy rate. He warned that if underlying inflation clearly exceeds 2%, the BOJ may have to accelerate the pace of rate hikes.

The market currently widely expects the BOJ to raise rates by 25 basis points to 1.25% at next week's policy meeting. Some traders are even betting the central bank may signal another rate hike in October.

US Treasury Secretary Bessent previously said he is "quite well informed" about the BOJ's next move, further reinforcing market expectations for a Japanese rate hike. Meanwhile, the yen has rebounded from a low near 164 in July to around 153.5, hitting a six-month high.

Stefan Angrick, Moody's head of Asia-Pacific economics, believes Masu's hawkish remarks are another signal that the BOJ is moving toward a rate hike, and expects the central bank may increase the frequency of rate hikes to once every three months in the future.

In the bond market, the yield on Japan's 10-year government bonds has broken through 3%, reaching a roughly 30-year high, indicating that the market is accelerating its reassessment of the asset pricing impact brought by Japan's monetary policy normalization.