Investors warn the Bank of Japan risks losing credibility if it does not accelerate rate rises after the yen fell to a four‑decade low. The BoJ is expected to hold rates steady at Friday’s meeting, but markets want faster hikes after last month’s quarter‑point increase to 1 %. Derivatives price only one more quarter‑point by January.

The yen dropped below ¥163 to the dollar for the first time since 1986, while ten‑year JGB yields hit 3 per cent, the highest this century. Laura Cooper of Nuveen ($1.4tn) says the BoJ is “already behind the curve” and losing credibility; jawboning has had little sustained impact.

Bond and currency sell‑offs have been worsened by high energy costs and fiscal plans, including a sales‑tax cut and a ¥370tn ($2.3tn) investment programme. Some fear political pressure to keep rates low, yet faster hikes could support the yen and ease long‑run inflation. Kazuo Ueda’s post‑decision press conference will be scrutinised for hawkish signals; traders see a ~70 % chance of an October hike.

Joy Yang of Point72 says the key signal is whether Ueda confirms no minimum wait before the next hike, while Osamu Takashima of Citi notes a roadmap to an October hike would be hawkish but uncertain.