Institutional Outlook on BOJ Rate Decision: Rate Hike Imperative, Yen May Face Pressure if Subsequent Guidance Insufficiently Hawkish

BlockBeats news, September 18: The Bank of Japan will announce its target interest rate today. Ahead of this, several institutions have released their forecasts for the BOJ's rate decision, summarized as follows:

Reuters: Surveyed economists expect the policy rate to reach 1.5% by the end of March next year and 1.75% in Q2 2027, with most economists believing the terminal rate will be at least this level.

BNP Paribas: Expects a 25 basis point hike to 1.25%, followed by further hikes in December and March next year to 1.75%. The BOJ may be concerned about upside inflation risks, as companies could pass on rising energy, metals, and chip costs to consumers in the future.

Goldman Sachs: Today's decision is "a done deal," with the earliest possible further hike in December. High energy prices, strong AI demand, a weaker yen, and loose fiscal policy could all push inflation above expectations. JGB yields still have room to rise, and current levels do not match the resilience of Japan's economy.

TD Securities: Expects a 25 basis point hike to 1.25%, followed by 25 basis point hikes each in December this year and in April, July, and October 2027, raising the target rate to 2.25%. If the guidance does not take into account a hike in October or December, the yen could be sold off in response, reaching the 157-160 range.

MUFG: The market expects the BOJ to hike by 25 basis points and signal further hikes. If the central bank does not release sufficiently hawkish rate hike signals, the yen may weaken. However, since the market has already priced in a cumulative 90 basis points of hikes over the next 12 months, if Ueda Kazuo takes a cautious stance, it could weigh on the yen.