BoJ Watch: Dancin' in September? The Risk of a Sept Rate Hike

Research evidence excerpt

M

Idea

August 5, 2026 04:44 AM GMT

BoJ Watch | Japan

Morgan Stanley MUFG Securities Co., Ltd.

Takeshi Yamaguchi

Chief Japan Economist

Dancin' in September? The Risk

of a Sept Rate Hike

Masayuki Inui

Economist

Although October remains our baseline, the risk of a September

hike cannot be ruled out, partly in the context of international

coordination to limit yen depreciation, even though it would not

be cited as the official rational. Such a move could heighten

concerns over the BoJ's independence.

Key Takeaways

One implication of the recent US-Japan coordinated FX intervention is that the

political environment for further BoJ tightening may now be more supportive.

We believe an October rate hike remains more likely than a September move

based on domestic economic and inflation fundamentals.

That said, we believe the risk of a September hike cannot be ruled out, partly in

the context of international efforts to limit yen depreciation.

The BoJ may instead refrain from hiking in September while signaling more

clearly that an October hike is likely at the September MPM.