After the Bank of Japan meeting, Citi Research stated that expectations for further rate hikes have cooled, and the terminal interest rate cap may be locked below 2%.
The Bank of Japan (BOJ) decided to raise interest rates by 25 basis points to 1.25% at its September 17-18 meeting, with a 7-2 majority vote. However, the two dissenting votes have prompted the market to reprice the outlook for further rate hikes. Citi Research noted that this highlights internal resistance within the policy board and has a direct impact on market expectations for rate hikes, with the probability of the terminal rate remaining at 2% or below having significantly increased. Goldman Sachs believes the statement did not signal a clear acceleration in the pace of rate hikes.
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