Japanese Yen: September BoJ risk builds – Commerzbank

Today Markets UAEAugust 21, 2026

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Volkmar Baur at Commerzbank argues that July inflation and strong Purchasing Managers’ Index (PMI) data in Japan suggest price dynamics would not block a Bank of Japan (BoJ) rate hike. While he still expects the BoJ to raise rates only in the fourth quarter, he concedes that the latest data would not preclude an earlier move in September, keeping Japanese Yen (JPY) policy risks in focus.

Inflation and PMI support rate hike case

“Admittedly, today’s inflation figures from Japan are probably of little significance. First, they are for July, while Tokyo’s August figures are due out next week.”

“And second, the nationwide August figures will also be available when the Bank of Japan meets for its next policy meeting on September 18. But at least today’s figures make it clear that inflation would not stand in the way of an interest rate hike, even in September.”

“The overall inflation rate rose to 1.9%, and the picture is similar for core rates – excluding fresh food (1.8%) and, additionally, excluding energy (1.9%) – with the rate of price increases appearing to stabilize at the desired 2%.”

“Added to this were quite positive figures released this morning from the purchasing managers’ indices, which point to a continued positive economic trend. The PMI for the manufacturing sector improved once again and, at 55.1, is back at a very good level, while the services component improved by more than one index point to 52.3.”

“We still expect the Bank of Japan to raise interest rates only in the fourth quarter. However, today’s data would not preclude a rate hike as early as four weeks from now.”