Standard Chartered strategists now expect a 25bps BoJ hike in September and a higher terminal rate of 1.75% amid JPY weakness.
Standard Chartered has pulled forward its Bank of Japan rate hike forecast to September from October, expecting a 25bps increase. The terminal rate projection for this cycle has also been raised to 1.75% from 1.50% previously, with two additional hikes now seen in 2027.
Previously, the bank anticipated a 25bps hike in October and another in Q2-2027, with a terminal rate of 1.50%. The revised outlook reflects a more aggressive tightening path, though strategists note the BoJ is unlikely to exceed market expectations, which price a terminal rate near 2.0% by end-2027.
Despite recent JPY strength, USD/JPY targets remain at 158 by end-Q3 and 160 by end-Q4, as yield-insensitive capital outflows continue to pressure the currency. FX intervention risks persist with USD/JPY trading near 160.