USD/JPY HOLDS NEAR 160 AS STANDARD CHARTERED BRINGS BOJ HIKE CALL FORWARD
Standard Chartered has revised its Bank of Japan policy outlook, bringing forward its expected 25-basis-point rate increase to September 18 from October previously as USD/JPY trades around the 159–160 area.
The bank now expects two additional 25-basis-point increases in the first and third quarters of 2027. As a result, Standard Chartered has raised its forecast for the terminal policy rate to 1.75% from 1.50% previously.
The revised path implies one additional 25-basis-point increase compared with the bank’s earlier forecast. Standard Chartered nevertheless expects the tightening process to remain gradual, citing slower economic growth and a higher fiscal burden as relevant considerations.
Market pricing currently points to a terminal BoJ rate of approximately 2.0% by the end of 2027, above Standard Chartered’s 1.75% forecast. The bank therefore sees a notable gap between its own policy projection and expectations already reflected in financial markets.
For USD/JPY, Standard Chartered maintains its institutional forecasts of 158 by the end of the third quarter and 160 by the end of the fourth quarter. The bank also notes that persistent capital outflows that are relatively insensitive to yield changes remain relevant to the Yen outlook.
For market participants, the key issue is whether future BoJ policy developments align more closely with Standard Chartered’s 1.75% terminal-rate projection or the market’s roughly 2.0% pricing. The 159–160 area remains an important current price reference for USD/JPY.
The September hike timing, 1.75% terminal-rate forecast and USD/JPY targets are Standard Chartered institutional projections rather than confirmed future BoJ decisions or exchange-rate outcomes.
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