Too early to declare end of tightening cycle

Bank of Japan Governor Ueda’s view that financial markets remain unstable suggests that the Bank may not raise rates as soon as October as we’re anticipating. However, Ueda reiterated that the Bank will press ahead with further tightening if the economy evolves as anticipated and confirmed that recent data on GDP growth and wages were in line with the Bank’s expectations. And while underlying inflation fell below 2% in July for the first time since 2022, that won’t have come as a surprise to the Bank, either. Accordingly, we’re sticking to our forecast of another rate hike in October.