Mizuho Securities: Still expect the Bank of Japan to maintain a hawkish stance in the short term.

Jin10 data reports on October 10 that Vishnu Varathan, Head of Macro Research at Mizuho Securities Asia (excluding Japan), stated in a report that although the likelihood of the Bank of Japan raising interest rates in October is weakening with the imminent appointment of a new prime minister, the Bank of Japan will still maintain a hawkish stance in the short term, but will not feel an urgent need to raise rates. Varathan pointed out that the 60 basis points increase so far has led to a larger rise in long-term Japanese government bond yields; therefore, the Bank of Japan will act cautiously to avoid excessive tightening of the economy. He also noted that the Bank of Japan may face limitations due to weak household confidence and the risk of “the potential adverse shock from the widening policy divergence between the Fed and the Bank of Japan, which could lead to a sudden appreciation of the yen.” He warned that if the Fed shifts to a clearly dovish stance while the Bank of Japan maintains a hawkish position, the resulting surge in the yen could severely impact Japan's export and asset markets.