The Bank of Japan is expected to keep interest rates steady today. Even though Japan’s August Consumer Price Index (CPI), including Tokyo’s inflation data, shows levels above the Bank’s 2% target, no changes in interest rates are expected. Tokyo’s CPI for August 2025 is 2.6% compared to last year, which aligns with forecasts. According to a Nikkei report and a poll, the Bank of Japan plans to keep its key interest rate at 0.50% during the September meeting. The announcement will likely occur between 0230 and 0330 GMT (which is 2230 to 2330 US Eastern time). Governor Ueda will hold a press conference at 0630 GMT (or 0230 US Eastern time).

Economic Calendar in Asia

The economic calendar for Asia on 19 September 2025 lists the following events. The data comes from the investingLive economic calendar, with times in GMT and previous results shown in the last column. The column next to it displays the expected median figures where applicable. With Tokyo’s inflation at 2.6%, price pressures remain above the Bank of Japan’s 2% goal. The central bank is expected to keep its key interest rate at 0.50% in tomorrow’s decision, signaling that the weak yen policy will likely continue. As a result, we should think about strategies that benefit from a falling yen, such as purchasing USD/JPY call options. This scenario is similar to what we observed after the BOJ cautiously ended negative interest rates in March 2024, which did not prevent the yen’s decline. Recent data shows that Japan’s real wages have fallen for 28 straight months, giving the BOJ justification to delay hikes and allowing USD/JPY to reach new highs. The predictability of the BOJ’s upcoming decision has reduced short-term currency volatility, making options more affordable. This might be a chance to buy long-term straddles on the USD/JPY, preparing for a potential policy surprise later in the year if inflation doesn’t decrease. We experienced significant volatility during past policy changes from 2022 to 2024, and the current calm may not last.

Impact on Japanese Equities

This monetary policy approach is likely to keep supporting Japanese equities. A weak yen increases the earnings of Japan’s large exporters, which has helped the Nikkei 225 rise over 8% since the beginning of the year. We could consider increasing long positions in Nikkei futures or purchasing call options to take advantage of this trend. The main risk in the coming weeks isn’t necessarily the BOJ’s decision, but any changes in Governor Ueda’s comments during the press conference. Nationwide core inflation has been above the 2% target for more than two years. Any indication that the bank’s patience is wearing thin could lead to a swift change in the yen’s value and impact equity markets. Create your live VT Markets account and start trading now.

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