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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 30 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 30 institutional desks. No promotion.
At a Glance
The desk anticipates a Bank of Japan rate hike in June despite April's CPI coming in lower than expected. ING indicates that government subsidies have artificially suppressed inflation figures, and they maintain that underlying price pressures remain strong, with central bank officials signaling a shift towards normalization. Per the full note, headline CPI fell to 1.4% year-on-year, below the market consensus of 1.6% and ING’s forecast of 1.8%. Strong first-quarter GDP growth and robust export data further support the BOJ's potential pivot.
Full Analysis
The desk expects the Bank of Japan to proceed with a rate hike in June despite April's CPI falling short of forecasts. Per the full note from ING, the softer-than-expected inflation is largely attributable to government intervention rather than a genuine cooling in price pressures.
April's headline CPI of 1.4% not only missed expectations but also indicates that despite the current number, core inflation trends remain above target. ING points out that while government subsidies have muted inflation in the short term, pipeline prices suggest a rebound is imminent.
The alternative read, which would conclude that inflation has truly decelerated due to other underlying factors, seems less plausible in light of these perspectives.
Our consensus target for USD/JPY is set at 1.075, with a range between 1.04 and 1.12. Key contributors to our forecast include: - jpmorgan - target of 1.10 for Mar-26 - bofa - target of 1.04 for Mar-26
The view from the desk aligns with jpmorgan, and sits near the upper bound of our projected spread, suggesting a strong case for USD appreciation against the JPY.
jpmorgan and bofa are the main firms regarding expectations for the BOJ’s trajectory, with jpmorgan supporting a hawkish tilt while bofa holds a more conservative stance.
Moreover, traders should monitor the USD/JPY pair closely as its fluctuation will mirror sentiment surrounding the BOJ’s policy adjustments and the overall risk appetite in markets.
From the original
ING says Japan's softer-than-expected April CPI, driven by government subsidies and a high food base, will not prevent a Bank of Japan rate hike in June, with pipeline prices pointing to a rebound. Summary: Source: ING analyst note on Japan April CPI Japan's headline CPI slowed t
The desk posits that despite an unexpected slowdown in Japan's inflation, the Bank of Japan (BoJ) is still positioned to raise interest rates in June. This view is supported by trends in government actions that have tempered inflationary pressures, creating a complex backdrop for monetary policy. Per the full note from ING Economics, the headline inflation rate fell to 3.5% in April, down from 3.6% in March, impacting BoJ's upcoming rate decisions. This nuance illustrates a pivotal moment as traders assess the balance of inflationary risks against the central bank's tightening agenda.
Lead — The desk anticipates a Bank of Japan (BoJ) rate hike in June despite an unexpected easing in Japan's consumer price index in April. Per the full note from **ing**, the moderation in CPI is largely attributed to government measures and the high base effect from last year's food prices, which contributed to this slowdown. However, core inflation remains steady, with ongoing growth supporting the view of tighter monetary policy. As the BoJ moves towards normalization, market participants should prepare for potential volatility in the JPY and consider implications for cross-currency flows.
The desk anticipates the Bank of Japan (BoJ) will respond to recent economic growth by implementing a rate hike in June. Per the full note from ING, Japan's GDP has shown unexpected resilience, increasing by 1.6% on an annualized basis in Q1 2023, a testament to the economy's robustness amid global uncertainties. The desk views this as a critical indicator that the BoJ is likely to prioritize inflation control, especially given the pressures from rising bond yields. With a consensus firmly backing this potential shift, traders should prepare for possible volatility when the decision is announced.
The desk believes that Japan's stronger-than-expected GDP growth signals a potential rate hike from the Bank of Japan (BoJ) in June, a view supported by ING Economics' recent analysis. The first quarter GDP grew at an annualized rate of 1.6%, exceeding expectations and challenging the notion that the BoJ may maintain its accommodative policy. Per the full note from ING, resilient economic performance and increasing inflationary pressures could prompt a more hawkish stance from the central bank, especially as they seek to stabilize the economy post-pandemic.
See how the Bank of Japan outlook moves the JPY bank consensus across 30 desks
View Bank of Japan outlook