JPMorgan Sees ECB Raising Rates to 2.75% in December 
Fed Minutes Signal Rate Hikes Remain Possible as Inflation Risks Persist 
China Set to Hold Benchmark Lending Rates Steady for 15th Month 
Bank of Korea Raises Rates to 3% as Inflation Stays Sticky 
Fed Chair Warsh Faces Key Jackson Hole Test 
ING Says Yen Is 20% Undervalued Against Dollar 
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With a September rate hike generally regarded as practically guaranteed, markets are now expecting a considerably more aggressive near-term policy stance from the Bank of Japan (BOJ). From just a month ago, this quick re-pricing of BOJ policy expectations has already pushed the yen to multi-month highs and is fundamentally changing JPY cross-currency pairings and carry-trade dynamics. Even if a 50-basis-point increase is still remote, hawkish board members have openly talked about the possibility, and markets are pricing in around 80 basis points of increases by June 2027, therefore implying a rhythm of quarterly or nearly quarterly actions following the September increase.
Several elements drive this hawkish change, including Governor Kazuo Ueda's warnings about inflation hazards and board member Hajime Takata's appeal for more "nimbler" tightening. Furthermore, U.S. Treasury Secretary Scott Bessent's pressure—urging greater BOJ rates to stop yen depreciation—seems to have strengthened Japan's will to follow a tightening course. Rising inflation and more aggressive wage settlements provide even more reasons for the BOJ to quicken its policy normalization. Therefore, the yen has already experienced a significant appreciation against the USD, declining from over 160 to the 154–155 range, and this strength is spreading to other major crosses like EUR/JPY, GBP/JPY, and AUD/JPY, therefore indicating the end of the ultra-cheap JPY funding era.
An aggressive BOJ tightening path has major consequences. If U.S. yields stabilize, a 25 basis point rise together with hawkish guidance could push USD/JPY toward 150–152. Still, hazards exist; the yen might drop if the BOJ adopts a less hawkish tone or U.S. data come out hotter. The market is now more concerned with "how quickly and how far" than with "if" the BOJ will raise interest rates. Key events to watch include the September 17–18 BOJ meeting for the rate decision and guidance, together with U.S. CPI data and the Fed's September 15–16 meeting that will jointly determine the direction of the yen and the larger currency markets.
