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MUFG’s Halpenny argues that the Bank of Japan (BoJ) is likely to hike 25 bps on 16 June, with markets pricing around an 80% chance. He notes that weaker Tokyo inflation partly reflects government measures, while persistent Japanese Yen (JPY) weakness despite record Ministry of Finance (MoF) intervention suggests BoJ action could help curb further selling alongside Oil and yield developments.
BoJ seen tightening as yen stays weak
"The BoJ pricing for its meeting on 16th June is a little less than for the ECB – the implied probability is around 80% for a 25bp hike. But action remains likely, and even though inflation has eased, the risk of being behind the curve is rising."
"Weaker inflation in Tokyo in part reflected government measures while the continued weakness of the yen is telling after the MoF confirmed a record one-month JPY 11.7trn worth of yen buying between 28th April and 27th May."
"Action would help to curtail yen selling although developments in the Middle East, crude oil prices and global yields will be key as well."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)












