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Analyst: Reduced Political Uncertainty in Japan Could Pave the Way for Bank of Japan Rate Hike in October

2025.10.21 15:48:36

October 21st. Christopher Wong, the FX strategist at Oversea-Chinese Banking Corporation (OCBC) in Singapore, expressed that it was anticipated for Kishida Fumio to be elected as Japan's Prime Minister after the agreement between the Liberal Democratic Party and the Komeito Party to form a coalition government. The fiscal prudence shown by the coalition was expected to reassure the market and the yen. The influence of this event on the USD/JPY pair might not be the same as the post-LDP election trend because the coalition government might require Kishida Fumio to adjust his previous supportive stance on stimulus policies. Additionally, as the macro backdrop enabled policy normalization, reducing a certain amount of political uncertainty might potentially open the way for the Bank of Japan to raise rates on October 30th. (FXStreet)
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