Bank of Japan officials may accelerate rate increases as yen depreciation fuels inflation risks, markets price October hike odds.
Bank of Japan officials are considering faster-than-expected rate hikes due to yen weakness amplifying inflation risks. The benchmark rate was recently raised to 1%, a 31-year high, but policy remains unchanged for the July 31 meeting.
Markets now anticipate a meaningful chance of another hike by October, deviating from earlier expectations of December. Underlying inflation is nearing the 2% target, prompting policymakers to focus on anchoring price growth.
USD/JPY volatility has risen around 163 as traders adjust to shifting BoJ policy expectations.