Market participants are increasingly speculating that the Bank of Japan could raise its policy interest rate in December, in light of recent remarks by senior BOJ officials indicating the central bank’s willingness to revise its monetary policy soon.
As Prime Minister Sanae Takaichi is looking to turbocharge the economy with aggressive fiscal spending and monetary easing, it is unclear whether she would tolerate another rate hike this year.
However, there are concerns that the yen’s depreciation could accelerate if the BOJ bows to government pressure and skips a rate hike at its next policy-setting meeting on Dec. 18-19.