Nomura: If Yen Continues to Weaken Toward 160, BOJ May Hike Rates Three Consecutive Times
nashnova research
Nomura FX strategist Yujiro Goto says the BOJ could raise rates at all three meetings in September, October, and December — 25 bp each — if the yen keeps weakening toward 160. For a central bank that spent nearly three decades fighting deflation at near-zero rates, that pace would be extraordinary.
How rare would three consecutive hikes be?
The BOJ spent nearly thirty years battling deflation, holding borrowing costs at or near zero.
This means → back-to-back-to-back 25 bp hikes in September, October, and December would be virtually unprecedented for this central bank.
Goto himself stresses this is an extreme scenario. His base case: at least one hike per quarter, with a USD/JPY target of 154.
What has the market already priced in?
Overnight index swaps (OIS — derivatives that reflect rate expectations) have fully priced a 25 bp BOJ hike in September.
Swaps also fully price one more hike by January.
In plain terms = the market is no longer debating "will they hike?" — the bet is on "how many times, how fast."
What are BOJ officials signaling?
Governor Kazuo Ueda has hinted that action is possible at the September meeting.
Board member Hajime Takata is more open — he has not ruled out large hikes or consecutive hikes.
This reflects a hawkish shift inside the BOJ from hints to near-explicit signals.
The yen is already rallying — what is driving it?
The yen gained over 2% this week, reaching roughly 156 per dollar.
Two drivers: rising expectations of faster BOJ tightening, and market speculation about a portfolio rebalancing at Japan's Government Pension Investment Fund (GPIF).
This means → the rally is not just BOJ talk — shifting expectations around capital flows are pushing too.
What is the biggest wildcard?
Politics: PM Sanae Takaichi has previously expressed reservations about rate hikes. Goto is blunt — "If she remains negative on BOJ hikes, the market will be disappointed and the yen could sell off again."
If instead Takaichi avoids interfering or stresses BOJ independence, the yen could break through 150.
The Fed: Fed officials recently signaled no rush to cut in September. If the Fed holds steady while the BOJ turns hawkish, narrowing rate-differential expectations could push USD/JPY below 155 sooner than the market expects.
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