Nomura warn of yen intervention – also see risk of a BoJ rate hike at its next meeting

Nomura with a review of last week's BOJ decision, what to watch for the yen, and a preview of the BOJ's upcoming meeting:

• The June meeting did not witness any hard-line surprises
• The Bank of Japan decided to reduce its purchases of Japanese government bonds after the monetary policy meeting in July, with details to be determined at the Monetary Policy Committee meeting.

Nomura says it's hard to see the yen turning stronger, and says that if macroeconomic developments lead USD/JPY to rise, there could be more talk of intervention by Japanese authorities.

Nomura adds that

• The Japanese economy is likely to remain on the recovery path, exceeding its potential after the contraction in the first quarter of 2024.
• Shinto wage increases this year have proven materially higher than last year, further stabilizing inflation through 2025.

For the next meeting (July 30 and 31):

• We expect the Bank of Japan to raise interest rates in October 2024, with the risk of delaying it until July.