Former Bank of Japan Executive Director Maeda thinks market pricing for the Bank of Japan isn’t hawkish enough.He says the BOJ is likely to raise rates in either December or January. That contrasts with market pricing at 45% for December and 73% for January. He then sees a further hike to 1% some time around summer of 2026.The peak of the BOJ strip is at 0.91% for next July.At the moment, the market is trying to suss out how proactive new PM Takaichi will be in leaning on the BOJ to keep rates low. At the same time, politically she is vulnerable to concerns about rising inflation.
This article was written by Adam Button at investinglive.com.
đź’ˇ DMK Insight
Maeda’s comments on the BOJ hint at a potential shift in monetary policy that traders need to watch closely. If the BOJ raises rates sooner than the market anticipates, it could lead to a stronger yen and impact forex pairs like USD/JPY. Currently, the market is pricing in only a 45% chance of a December hike and 73% for January, suggesting traders might be underestimating the BOJ’s resolve. This divergence could create volatility in the forex market, especially if the BOJ signals a more aggressive stance. Keep an eye on the USD/JPY pair; a break above recent resistance levels could indicate a bullish trend for the yen. On the flip side, if the BOJ holds off, it could lead to a sell-off in the yen as traders recalibrate their expectations. The key takeaway here is to monitor the BOJ’s upcoming communications closely, as any hints of a rate hike could shift market sentiment dramatically.
đź“® Takeaway
Watch for BOJ signals on rate hikes; a December move could strengthen the yen, impacting USD/JPY significantly.






