USD/JPY: BOJ to hike rates by less than 50bps by December 2025 – BBH

USD/JPY is up near a multi-week high just under 151.00 with the next big resistance offered at the 200-day moving average at 151.75, BBH's FX analysts report.

Bar for an aggressive tightening cycle is high

"The Bank of Japan (BOJ) published the minutes of the January 24 meeting. At that meeting, the BOJ raised the policy rate 25bps to 0.50%, in line with consensus, and reiterated it would continue to raise the policy interest rate if the outlook for economic activity and prices will be realized. Only Nakamura Toyoaki dissented on raising rates, which was not surprising as he also voted against raising rates last July."

"A key takeaway from the minutes is that the bar for an aggressive tightening cycle is high. One member pointed out that 'it would be necessary for the Bank to carefully adjust its monetary policy while examining the impact of the policy interest rate hike on economic activity and prices at the time of each rate hike.'"

"The swaps market continues to imply less than 50bps of rate BOJ hikes by December 2025 and terminal rate of 1.00% to 1.25% over the next two years."