[Bank of Japan Adjusts Communication Strategy, Paving the Way for a Possible Rate Hike as Early as December]
The Bank of Japan is preparing for a potential rate hike as early as December by adjusting its communication strategy. Amid concerns over the sharp depreciation of the yen and reduced political pressure to maintain low interest rates, the Bank of Japan has recently adopted more hawkish rhetoric. According to two informed sources, changes in the central bank's statements over the past week have shifted market focus from the U.S. economy to inflation risks caused by the yen's depreciation, aiming to signal the possibility of a December rate hike.
Japanese Prime Minister Sanae Takaichi and Bank of Japan Governor Kazuo Ueda held a key meeting last week, which appears to have eased political resistance from the new government toward a rate hike. However, sources noted that the December rate hike could still be postponed to January, depending on the Federal Reserve's rate decision, which will be announced a week before the Bank of Japan's meeting.