MUFG: The possibility of another rate hike by the Bank of Japan before the end of the year increases

MUFG believes that the Bank of Japan is increasingly likely to raise interest rates again before the end of the year, depending on Japan's economic performance and post-election developments. The upcoming Japanese election is crucial, but external factors such as the US election may affect the effectiveness of yen gains. MUFG said that Japanese stocks have fully recovered from the summer decline, indicating that financial stability risks have improved, which may encourage the Bank of Japan to maintain or accelerate its rate hike trajectory. Expectations for a Bank of Japan rate hike may increase after Japan's upcoming general election (October 27). This development could be a catalyst for further appreciation of the yen later this year. However, if Trump wins the US presidential election, which may be accompanied by higher US Treasury yields and a stronger US dollar, any potential gains in the yen may be overshadowed. (Jinshi)