Fitch are forecasting a Bank of Japan charges to 1% (by the tip of 2026!)

I posted earlier this week on Ftich analysts on the FOMC:

• Fitch says the coming Federal Reserve easing cycle will be mild and slow

Fitch now on the Bank of Japan:

• BOJ “is bucking the global trend of policy easing and hiked rates more aggressively than we had anticipated in July. This reflects its growing conviction that reflation is now firmly entrenched.”
• core inflation above the BOJ’s target for 23 straight months
• frims prepared to grant “ongoing” and “sizable” wage rises
• situation quite different from the 1990s “lost decade” when wages failed to grow amid persistent deflation
• BOJ’s goal of a “virtuous wage-price cycle”
• BOJ’s confidence that it can continue to raise rates towards neutral settings

Fitch forecasts are for:

• 0.5% by the end of 2024
• 0.75% in 2025
• 1% by end-2026

And conclude:

• “A more hawkish BOJ could continue to have global ramifications.”

USD/JPY update:

This article was written by Eamonn Sheridan at www.forexlive.com.