Bank of Japan's Rate Hike Probability Reaches 80% in September

The possibility of a rate hike by the Bank of Japan (BOJ) in September is drawing attention in the Japanese bond market. According to the Asahi Shimbun, the probability of a rate increase by the BOJ has reached 80%, which is related to U.S. Treasury Secretary Scott Vessen's calls for an early hike. The BOJ is scheduled to hold its monetary policy meeting on September 17-18. The depreciation of the yen and inflationary pressures are acting as the backdrop for a potential rate increase, which can be interpreted as a measure aimed at both defending the yen and addressing inflation. The yield on Japan's 10-year government bonds has reached 2.930%, marking the highest level since 1996, while the yields on 2-year and 5-year bonds have also risen to 1.690% and 2.170%, respectively. Market interest is shifting beyond the question of whether there will be a rate hike in September to the final level of interest rates, with the possibility of the terminal rate rising from the 1% range to 2%. If the BOJ's rate hike materializes, the pace of additional hikes may accelerate, which could also impact Korean investors. The BOJ is expected to release key opinions on October 1.

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