BofA sees BoJ hiking in January, USD/JPY supported by U.S.-Japan summit
Bank of America expects the Bank of Japan to maintain its cautious policy stance at the October meeting but deliver its next interest rate hike in January, as policymakers balance still-elevated inflation with a fragile recovery in domestic demand.
In a client note, the bank said it expects the BoJ to hold rates this week with a hawkish tone, signalling confidence that underlying inflation remains above target:
- see the October meeting as a hawkish hold — a setup for a possible hike early next year
The bank’s base case calls for a 25 basis-point rate increase in January 2026, citing gradual progress in wage growth and service-sector inflation.
While yen strength could re-emerge later in the year if the BoJ signals a firmer tightening path, BofA said near-term dynamics — including U.S. yield differentials and political optics around the summit — argue for continued dollar resilience.
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The Bank of Japan is meeting on October 29 and 30.
