Markets are assessing reports that the Bank of Japan may raise rates to 1.0% at its June 15-16 meeting, with analysts split on how much additional hawkish guidance could still support the yen and affect risk assets including crypto.
Morgan Stanley MUFG Securities said there is limited scope for Bank of Japan Governor Kazuo Ueda to sound more hawkish next week than markets already expect, with overnight index swaps largely implying policy rates could reach 1.25% by year-end and a 25 basis-point hike to 1.0% at the BOJ’s June 15-16 meeting. Nikkei also reported the BOJ may raise its benchmark rate from 0.75% to 1.0%. BofA Global Research strategist Shusuke Yamada said the yen could gain support if the BOJ raises rates and markets lift expectations for further tightening, with current pricing implying about a 50% chance of another increase in October. He said pricing above 60% for October and above 50% for March next year would likely be viewed as hawkish. The prospective move is also being watched by crypto investors because tighter yen funding conditions and shifts in carry trade dynamics can affect global liquidity and risk appetite.